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Lenders need to step up, ASIC says

Some home loan lenders have made accessing financial assistance so difficult that more than one in three Australians dropped out of the application process at least once, according to a new ASIC report.

The report, ‘Hardship, hard to get help: Lenders fall short in financial hardship support’ outlines findings from ASIC’s review of ten large home lenders. The review found they should be doing more to support Australians who were struggling to meet their repayments.

The report also found that 40% of customers who received hardship assistance through reduction or deferral of payments, fell into arrears right after the assistance period ended.

As increasing numbers of Australians struggle with cost of living pressures,

According to ASIC Chair Joe Longo, in the worst cases lenders ignored hardship notices, effectively abandoning customers who needed their support and were not meeting community expectations.

“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.

“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”, he added.

The report highlights failures of lenders to identify customers in financial stress, use of ‘cookie-cutter’ approaches to dealing with hardship requests, as well as onerous assessment and approval processes.

ASIC is also concerned lenders have inadequate arrangements for supporting vulnerable Australians including those experiencing family violence.

ASIC Commissioner Alan Kirkland, whose remit includes support for vulnerable consumers, said lenders were not “putting customers front and centre” in their approach to financial hardship.

“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,” Commissioner 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.

“We encourage people worried about making repayments to contact their lender and if not happy with the response, to lodge a complaint with them”, he advised.

From the 10 large home lenders reviewed in 2023, seven had improvement programs in place to manage financial hardship however, as ASIC’s report highlights, much more work is required.

About Adam Nobel

CEO | Principal
M. Bus, Grad Dip Adv, B.Int Bus, LREA

adam@hugoalexander.com.au

0417 007 001

Adam is the founder and Principal of Hugo Alexander Property Group. With a previous career in advertising, 22 years experience in property investment, and 16 years in Brisbane real estate, he knows the market inside out to ensure his clients grow their wealth faster.

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