Lenders and credit representatives are being advised to pay close attention to new financial hardship provisions that take effect next month, as part of a number of changes to the National Consumer Credit Protection Act.The new hardship provisions change the way borrowers can notify lenders that they are in hardship, change the timing for default notices and impose big fines for non-compliance.With effect from March 1, the Consumer Credit Legislation Amendment (Enhancements) Act 2012 also introduces changes to the rules covering reverse mortgages, salary deductions and interest rate caps on small, short-term loans.A partner at Gadens Lawyers, Jon Denovan, said the new hardship provisions would have the most impact. They make it easier for borrowers to apply for relief and the loan limit has been removed (currently hardship applications apply when the credit amount is A$500,000 or less).The Financial Ombudsman Service and Credit Ombudsman Service both report that disputes arising from the handling of hardship applications make up a big part of their workload. It is a part of the NCCP Act that some lenders have struggled to get right.Denovan said the concept of a hardship application had been replaced by a hardship notice. "If a debtor can't meet their obligations under a credit contract they may give notice of their inability to meet those obligations. That is a hardship notice and it can be given orally or in writing."Once a lender has received a hardship notice it has 21 days in which to issue an information notice, seeking further information from the borrower. The borrower has 21 days in which to respond.The lender then has 21 days in which to issue a decision notice. Failure to issue a notice to the borrower, outlining the lender's decision whether or not to change the terms of the loan contract, within the required time can attract a civil penalty of up to $1.7 million.A lender cannot start enforcement proceedings before responding to the hardship notice and 14 days has passed since the issue of the response. Borrowers have the right to appeal the decision at an ombudsman service.