With household financial stress levels rising as a result of the economic impact of COVID-19, it would be a fair bet that debt management companies like FSA Group would be doing good business. But that’s not the case.
FSA released its 2019/20 financial report on Friday, disclosing a significant reduction in the number of consumers seeking the company’s services.
FSA offers “a range of services to assist clients wishing to enter into a payment arrangement with their creditors, including informal arrangements, debt agreements, personal insolvency agreements and bankruptcy”.
During the year to June, the number of clients seeking informal arrangement and debt agreements fell 5 per cent and the number seeking personal insolvency agreements and bankruptcy fell 20 per cent.
FSA has 19,736 informal debt agreement clients under administration – down from 21,725 last year; and A$353 million of debt being managed – down from $379 million.
The company said government and bank support packages had taken the pressure off people to manage their debts.
It said: “We believe demand for our services will start to increase in the months leading up to the withdrawal of both government and bank support packages.”
The company said it has undertaken some restructuring to reduce costs.
FSA is also a lender, offering mortgages and personal loans. It intends to focus more on that business, with a new brand, Azora, and a marketing campaign later this year.
It has a $394 million home loan book – up from $382 million in 2018/19 – and a $63 million personal loan book – up from $59 million.
Debt management services and lending contribute to group earnings fairly equally. Services contributed $8.2 million – up from $8.1 million in 2018/19; and lending contributed $8.9 million – up from $7.9 million.
Overall, the company made a profit of $16.3 million for the year to June, compared with a profit of $14.4 million in 2018/19.
Return on equity was 30 per cent – unchanged from last year.