ASIC deputy chair Sarah Court
The Australian Securities and Investments Commission has warned lenders it will focus on compliance with financial hardship obligations in the year ahead and is ready to take action through the courts.
ASIC has been collecting data relating to financial hardship since August last year and plans to release its findings mid-year.
ASIC deputy chair Sarah Court said lenders should not wait for the outcome of the review, and should start addressing any deficiencies in their practices now.
The regulator has already taken action against Westpac over the issue, launching proceedings in September alleging the bank failed to respond to customer hardship notices in the required timeframe and, in some cases, sold customer account to debt collectors while hardship requests were in progress.
Court said ASIC would not hesitate to initiate court proceedings “should similar issues with other lenders attract our attention”.
ASIC’s warning follows the release of Financial Counselling Australia’s latest Rank the Banks report last month, which said most lenders in the Australian consumer credit market were not giving their customers appropriate hardship support.
Also last month, the Australian Financial Complaints Authority reported that it received 102,790 complaints last year – a 23 per cent increase on 2022. Complaints involving financial hardship rose sharply.
And in December, the Banking Code Compliance Committee reported a 39 per cent increase over six months in breaches of Part 9 of the Banking Code of Practice, which covers obligations to support customers facing financial difficulty.
Breaches included failing to respond to financial hardship requests, persisting with debt collection activities despite hardship arrangements being in place and neglecting to follow through on agreed arrangements.
BCCC chair Ian Govey said: “Banks have had ample time to anticipate the surge in financial hardship requests and implement measures to manage them effectively. We expect the industry to prioritise improvements in staff training, systems and procedures to better support people in need during these challenging times.”