ASIC urges banks to improve customer hardship support

Amid relentless cost-of-living pressures, the Australian Securities and Investments Commission (ASIC) has dispatched letters to 30 large lenders, urging them to better support customers in financial hardship.

It came as ASIC reported an increasing number of customers are experiencing financial distress and difficulty due to cost-of-living pressures.

In an open letter to the big four banks; non-majors; and buy now, pay later providers, ASIC said there had been a 28 per cent increase in calls to the National Debt Helpline in 2023 compared to this time last year.

In addition, surveys indicated that a growing number of consumers are reporting very high levels of financial stress.

While acknowledging that delinquencies and hardship application volumes are on the rise, albeit from relatively low levels, ASIC commissioner Danielle Press has emphasised the need for proactive action.

“The economic environment has shifted over the last year, placing significant financial pressure on everyday Australians,” Ms Press said.

“ASIC expects all lenders to seriously consider the expectations outlined in our letter, and to take the necessary action to ensure they fulfil their obligations in supporting their customers.”

In light of the current economic environment, the regulator has called on lenders to have appropriate arrangements to respond to and support consumers experiencing financial hardship.

Ms Press said lenders must have “the right arrangements in place to respond to requests for assistance from customers experiencing financial hardship” and to work constructively with them to find a sustainable solution.

ASIC has told lenders they must:

• Proactively communicate how and when customers can seek assistance
• Genuinely consider customer circumstances to develop sustainable solutions where possible
• Communicate regularly with customers throughout and at the end of the assistance period

In response to higher interest rates and cost-of-living pressures, financial hardship will be an area of increased focus for ASIC over the next 12 months, as highlighted in the regulator’s latest corporate plan.

ASIC’s ongoing work on financial hardship will include data collection from 30 large lenders about hardship applications.

Furthermore, ASIC has initiated a comprehensive review of the practices of 10 major home lenders concerning financial hardship. Notably, these lenders were recipients of recent letters.

ASIC expects to release findings from this review in early to mid-2024.

List of lenders and lending groups that received ASIC’s letter:

• Allied Credit Pty Ltd
• American Express Australia Limited
• AMP Bank Limited
• Australia and New Zealand Banking Group Limited
• Bank of Queensland Limited
• Bendigo and Adelaide Bank Limited
• Bluestone Mortgages Pty Ltd
• Commonwealth Bank of Australia
• Credit Union Australia Limited
• Firstmac Limited
• Heritage and People’s Choice Limited
• HSBC Bank Australia Limited
• Humm Group Limited
• ING Bank (Australia) Limited
• La Trobe Financial Asset Management Limited
• Latitude Group Holdings Limited
• Liberty Financial Group Limited
• Macquarie Group Limited
• MoneyMe Limited
• National Australia Bank Limited
• Newcastle Greater Mutual Group Ltd
• Nissan Financial Services Australia Pty Ltd
• Pepper Money Limited
• Plenti RE Limited
• Resimac Limited
• Suncorp-Metway Limited
• Toyota Finance Australia Limited
• Volkswagen Financial Services Australia Pty Ltd
• Westpac Banking Corporation
• Zipmoney Payments Pty Ltd

Related: [ASIC to crack down on predatory lending]