Yahoo Lifestyle Big banks slammed for ‘abandoning’ mortgage customers
Commonwealth Bank, Westpac and NAB are among those accused of failing struggling customers.
Australia’s biggest home loan lenders are under fire for not doing enough to support customers struggling with their repayments. Some have been accused of “abandoning” borrowers in strife altogether.
A new report released by ASIC found lenders - including the Commonwealth Bank, Westpac, NAB, Macquarie Bank and ING - are making it difficult for customers to get financial help. The process is so hard that 35 per cent of Aussies have given up on hardship applications, often because of “unnecessary barriers”.
As Aussies struggle with higher mortgage repayments and cost-of-living pressures, ASIC chair Joe Longo said banks were not meeting community expectations and it was “simply not good enough”.
Are you struggling with higher mortgage repayments? Share your story with tamika.seeto@yahooinc.com
“In the worst cases, lenders ignored hardship notices, effectively abandoning customers who needed their support,” Longo said.
“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.”
During the last quarter of 2023, there was a 54 per cent increase in hardship notices for home loans compared to a year earlier.
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Customers not ‘front and centre’
ASIC commissioner Alan Kirkland said lenders weren’t putting their customers “front and centre” in their approach to financial hardship.
In one instance shared by ASIC, a customer who was experiencing domestic violence asked her lender for a deferral on her loan repayments so she could move into an apartment with her daughter.
She spent five weeks calling multiple times, sending emails and completing applications before the request was approved. She also had to complete “onerous” paperwork and repeat her story several times, which was “distressing”.
“Many lenders aren’t taking their customers’ unique situations into account, instead providing a standardised ‘one-size-fits all approach’, which is not meeting customers’ needs,” Kirkland said.
“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.”
The report also found lenders had varied approaches to communicating with customers during and at the end of hardship periods. It found 40 per cent of customers who received hardship assistance through a reduction or deferral of payments fell behind on their repayments right after the assistance period ended.
‘Room for improvement’, banks say
Australian Banking Association chair Anna Bligh said banks had “longstanding arrangements” to support customers facing financial difficulty, including hardship teams.
“Every single week banks help thousands of Australians in financial trouble with a range of practical tools including restructuring loans to lower repayments, moving people to interest only arrangements or potentially deferring payments for a period,” Bligh said.
According to ASIC’s report, 6 per cent of completed hardship requests were declined. Around a quarter were withdrawn or declined due to the customer not providing the requested information.
"In any organisation, there is always room for improvement. Banks will consider these findings and work with ASIC on any further ways to support customers,” Bligh said.
ASIC recommends customers experiencing financial hardship talk to their lender as soon as possible and ask for assistance. If they are unhappy with their bank’s service or decision, they can make a complaint to their lender and then AFCA.
If you're feeling overwhelmed and need help dealing with financial stress, you can contact free advice and counselling from the National Debt Helpline. You can call 1800 007 007 between 9.30am and 4.30pm Monday to Friday, or reach out to Mob Strong Debt Help on 1800 808 488.
