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Banks and lenders failing one in three in financial distress
ASIC slams 'cookie-cutter' responses to customer hardship.
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One in three customers in financial distress who reach out to their bank or lender for financial hardship, drop out of the process at least once, according to a new report from the corporate regulator.
The Australian Securities and Investments Commission (ASIC) said lenders were taking a non-responsive and ‘cookie-cutter’ approach to financial hardship requests and making it too difficult for customers to access support.
“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,” says ASIC commissioner Alan Kirkland.
“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,” he adds.
The lack of support and, in some cases, failure to respond when customers flagged they were struggling, is unacceptable
ASIC commissioner Alan Kirkland
Along with onerous assessments and approvals processes, ASIC says lenders are ignoring hardship notices, “effectively abandoning customers who needed their support”.
ASIC also found 40% of customers who received hardship assistance through reduction or deferral in payments fell into arrears right after the assistance period ended, showing again that the system is not working to tailor solutions for customers.
CHOICE reported last month that a growing number of Australians facing mortgage stress are not receiving adequate support from their home-loan provider and that many weren’t aware of their rights to request help.
ASIC’s report was endorsed by the Australian Financial Complaints Authority (AFCA) who said the findings mirrored what they are seeing in regards to complaints about lenders.
Consumer Action Law Centre CEO Stephanie Tonkin says they have been telling lenders for over a year that they need to lift their game.
The hardship stories our financial counsellors hear every day are complex and unique, requiring tailored and thoughtful solutions, not a cookie-cutter approach
Consumer Action Law Centre CEO Stephanie Tonkin
“The hardship stories our financial counsellors hear every day are complex and unique, requiring tailored and thoughtful solutions, not a cookie-cutter approach,” Tonkin says.
“This report calls for lenders to undertake a serious wholesale review of their customer service systems and culture, beginning with putting the customer – not debt recovery – at the centre. This must also involve lenders getting better at identifying hardship presenting to their contact centres,” she adds.
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