AFCA endorses ASIC’s call for lenders to do better on hardship

David Locke

The Australian Financial Complaints Authority (AFCA) endorses the corporate regulator’s call today for lenders to improve their approach to supporting customers experiencing hardship.

The Australian Securities and Investments Commission (ASIC) today released a report, “Hardship, hard to get help: Lenders fall short in financial hardship support,” which says lenders should be doing more to support 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, Chief Ombudsman and Chief Executive Officer of AFCA, which is the national financial ombudsman service.

AFCA recently released data showing it had received 25 per cent more complaints involving financial difficulty in 2023 than a year earlier. This category includes disputes over requests for hardship assistance. Of the 5,396 complaints involving financial difficulty, a third related to home loans.

“We are concerned about rising complaints involving financial difficulty and barriers in receiving hardship assistance,” Mr 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.”

As the ASIC review also found, AFCA has seen complaints where lenders have provided a standardised, or “cookie cutter”, response that did not consider the customer’s individual circumstances.

AFCA, too, has concerns that complainants experiencing vulnerability are not always identified or given the care required.

Other issues AFCA sees included lenders issuing default notices to consumers who had repayment arrangements and debt recovery action being taken while a complaint was still before AFCA, which is not permitted.

AFCA will continue to monitor these complaint trends as part of its systemic issues function.