Lenders need to do better on financial hardship assistance: ASIC
By Adrian Suljanovic 20 May 2024
The regulator has warned lenders that it will take enforcement action if they do not improve their financial hardship assistance services.
The Australian Securities and Investment Commission (ASIC) has lambasted lenders for making financial assistance support hard to access.
In its Hardship, hard to get help: Lenders fall short in financial hardship support report, ASIC outlined findings from a review of 10 large home lenders after concerns were raised relating to delays in providing assistance.
According to ASIC, the review found that lenders should be doing more to support Australians who are struggling to meet their repayments.
The report found that some home loan lenders have made accessing financial assistance so difficult that 35 per cent of lender customers dropped out of the application process at least once.
Further, the report found that 40 per cent of customers who obtained hardship assistance through reduction or deferral of payments fell into arrears right after the assistance period ended.
ASIC chair Joe Longo commented: “In the worst cases, lenders ignored hardship notices, effectively abandoning customers who needed their support.”
“For people who reach out to their lender to signal they need support, this can be devastating. Too many Australians in financial hardship are finding it hard to get help from their lenders and it’s time for meaningful improvement,” Longo said.
Long further stated that the regulator has “spelt out in a letter to the CEOs of lenders” that they must meet their obligations to customers experiencing financial hardship.
“This report highlights lenders must improve the way they deal with customers experiencing hardship. What we have seen is simply not good enough – struggling customers deserve the right support in their time of need.
“ASIC has made this a priority focus area, and where appropriate, we will not hesitate to take enforcement action to protect consumers,” Longo added.
Additionally, ASIC’s report has placed a spotlight on failures of lenders to identify customers under financial stress and opting to use “cookie-cutter” approaches when dealing with hardship requests.
ASIC commissioner, Alan Kirkland, said that lenders were not “putting customers front and centre” in their approach to financial hardship.
“The lack of support and in some cases, failure to respond when customers flagged they were struggling, is unacceptable and greatly adds to the distress of customers already struggling with heightened levels of stress and anxiety.
“We encourage people worried about making repayments to contact their lender and if not happy with the response, to lodge a complaint with them,” Kirkland stated.