Following half a decade of cost-of-living challenges with many households facing financial difficulties, with KiwiSaver hardship applications continuing to increase, many people are reaching out for help. The time needed with a financial mentor to support applicants to explore hardship relief options is continuing to increase.

FinCap has asked for government support to maintain and increase current funding levels for the Building Financial Capability sector. We have also asked for the establishment of small levies on industry to support the sustainable funding of financial mentors.

The Ministry of Social Development provides $19.5 million of sustainable funding for 181.5 FTE financial mentoring roles. However, there are currently 762 financial mentors registered with FinCap.

Financial mentors provide vital support to communities, making sure financial problems don't spiral into more physical and mental health problems.

A very small levy on financial services, energy providers, telecommunications providers, KiwiSaver providers and gaming industry would be the best way to increase funding for financial mentors who are responsive to financial challenges in their communities.

The submission also flags the issue with the scale of government spending on debt collector's use of attachment orders to recover debt from people who simply have no funds to pay, and in some cases no understanding or awareness of the money coming off their benefits to cover a debt they incurred some time ago.

FinCap is asking for a commitment from government to licence debt collectors and introduce consequences for inacceptable debt collection practices, as well as increase government funding for financial mentoring. FinCap is also asking a commitment from industry to contribute to sustainable funding for financial mentoring.

You can read FinCap's submission here.