New report highlights need for better assistance for people struggling to meet loan repayments
The Australian Financial Complaints Authority (AFCA) has endorsed the call of the Australian Securities and Investments Commission (ASIC) for lenders to improve their support for customers experiencing hardship.
ASIC has released a report titled “Hardship, hard to get help: Lenders fall short in financial hardship support” highlighting the need for better assistance for people struggling to meet loan repayments.
“This is in line with what we are seeing in complaints about financial difficulty and requests for hardship assistance,” said David Locke (pictured), chief ombudsman and chief executive of AFCA.
The national financial ombudsman service recently reported a 25% increase in complaints involving financial difficulty in 2023 compared to the previous year. This includes disputes over hardship assistance requests. Of the 5,396 complaints involving financial difficulty, one third is related to home loans.
“We are concerned about rising complaints involving financial difficulty and barriers in receiving hardship assistance,” Locke said. “As challenging economic conditions continue, we urge all lenders to engage with customers to ensure they receive genuine, individual consideration in response to their requests for help.”
AFCA and ASIC both found instances where lenders provided standardised responses that did not consider individual circumstances. Additionally, AFCA is worried that vulnerable complainants are not always identified or given the necessary care.
Other issues noted by AFCA included lenders issuing default notices to consumers with repayment arrangements and taking debt recovery action while a complaint was still before AFCA, which is not permitted.
AFCA said it will continue to monitor these complaint trends as part of its systemic issues function.
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