Banks are legally required to have processes in place to assist customers in debt, but a study by the Australian Securities and Investments Commission (ASIC) found that the application process for financial hardship assistance is too difficult. As a result, many people who receive assistance end up back in arrears shortly after. ASIC Commissioner Alan Kirkland stated that banks are not meeting community expectations, with over a third of people giving up on the assistance process due to its complexity.
The report, titled “Hardship: Hard to Get,” highlighted that lenders make it challenging for customers to submit a hardship notice and lack effective communication. In the last quarter of 2023, the number of hardship notices related to home loans increased by 54 percent compared to the previous year, with 80 percent of arrears relating to mortgages.
ASIC collected data from 30 lenders, including 20 home lenders, and conducted a detailed review of 10 lenders’ policies and procedures. The regulator found that some lenders did not adequately support customers experiencing vulnerability, leading to stressful, inefficient, and inflexible assessment processes.
Some lenders were not proactive in informing customers about hardship assistance, and others failed to identify when a customer was in need of help. This resulted in some customers receiving no assistance or falling into arrears immediately after the hardship period ended. ASIC warned that compliance with financial hardship obligations will be an enforcement priority in 2024, and prosecutions may be taken against non-compliant lenders.
All lenders involved in the study will be required to prepare an action plan to address the issues raised. ASIC will continue to collect hardship-related data and launch a consumer awareness campaign on financial hardship. The lenders included in the study were Bank of Queensland, Bendigo and Adelaide Bank, Commonwealth Bank, ING Bank, Macquarie Bank, National Australia Bank, Pepper Money, Resimac, Liberty Financial, and Westpac Banking Corporation. Please rewrite the following sentence:
Original: “I am going to the store to buy some groceries.”
Rewritten: “I’m heading to the store to purchase groceries.”
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