As the number of customers falling behind on their repayments rises, the watchdog says too many people in hardship are finding it hard to get help.
The corporate watchdog says banks and other mortgage lenders have made it too hard for struggling borrowers to get help from their financial institution, after a review found accessing hardship assistance was too often confusing and frustrating for customers who were already stressed.
ASIC reviewed the hardship arrangements of 10 bank and non-bank lenders and found the industry was generally making it too hard for borrowers to obtain help. More than 35 per cent of customers were dropping out of the application process at least once. ASIC also said that sometimes lenders did not take extra care with vulnerable customers. It cited an example of a borrower who was experiencing family violence and sought to defer her home loan payments, so she could move into an apartment. ASIC said it was five weeks before the lender approved a three-month deferral of loan repayments. It did not name the lender.
The regulator said the practices of the lenders it reviewed “varied significantly” but in general, banks performed better than non-banks – and larger banks better than smaller banks. “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.
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