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Australians struggling to meet their loan repayments are being urged to reach out to their bank as part of a new “Don’t tough it out on your own” campaign from the Australian Banking Association (ABA).
A range of advertisements began running on radio, in digital news and on social media yesterday (30 October) and will continue to push out over the next four weeks to flag that borrowers who may be struggling with mortgage repayments or their overall debt burden may be able to access financial assistance.
The chief executive of the ABA, Anna Bligh, said consumers struggling with loan repayments should reach out to their bank as they may be able to help by:
- Lowering home loan or credit card payments.
- Restructuring the length of a loan.
- Moving a customer to interest-only payments for a while.
- Deferring payments for a period.
Ms Bligh added: “Banks know many of their customers are making difficult financial decisions right now as the country navigates challenging economic conditions.
“Banks stood by their customers during the COVID-19 pandemic deferring payments for people who for the first time in their lives found themselves unable to pay. Banks stand ready to help people again now.
“The earlier people reach out, the faster banks can help. Don’t tough it out on your own.
“People who are finding their finances are stretched should not feel they have no options and they have to do it on their own. Banks have dedicated, highly experienced teams ready to help. Please get in touch. Don’t delay.”
The launch of ABA’s campaign came after the Australian Securities and Investments Commission (ASIC) issued an open letter to 30 large lenders in August, urging them to improve their support for customers grappling with financial hardship.
The letter came after ASIC found there had been a 28 per cent increase in calls to the National Debt Helpline in the year to August 2023 compared to the previous year, along with several surveys finding a growing number of consumers reporting high levels of financial stress.
At the time, ASIC commissioner Danielle Press emphasised the need for proactive action by lenders.
Ms Press stated: “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.”
Last week (26 October) the Banking Code Compliance Committee published its report focusing on small businesses and agribusinesses due to concerns those sectors were reaching out to banks too late when facing financial difficulties.
The report indicated the need for more influence and advocacy to enhance capabilities within the accounting sector, impose stricter regulations on unregulated sectors and increase awareness of the broker industry, given its pivotal role in supporting small business during financial difficulties.
The ABA CEO said despite the “unpredictable economic climate”, there were reassuring signs that many customers were navigating it well, however, warned it was important to look out for the warning signs of financial stress.
“Thankfully, recent data shows that most customers are keeping up with their repayments, and that arrears are well within historical ranges,” Ms Bligh commented.
“But for those worried about falling behind or finding it difficult to navigate the current conditions, banks have options to assist in the short or long term.
“The spiral into financial hardship can happen very quickly but early assistance can make a real difference. Please talk to your bank.”
The ABA also revealed it had recently relaunched its Financial Assistance Hub with updated information for customers struggling with repayments or are moving off fixed-rate mortgages.
Originally instigated during the pandemic to help those struggling, the ABA said the hub was renewed to help those undergoing financial stress.