A recent report by ASIC has implications for all credit providers.
ASIC has issued Report 783 – Hardship, hard to get help: Lenders fall short in financial hardship support ("Report 783") after conducting a review of ten (10) home lenders to understand how credit licensees are supporting customers experiencing financial hardship. ASIC identified that the root cause for licensees adopting poor practices was their focus on financial risk and operational efficiency instead of customer experience and outcomes. Despite the report only reviewing ten (10) home lenders, the findings of Report 783 are relevant and applicable to all credit providers.
Expectations of Lenders
Compliance with the financial hardship requirements remains an enforcement priority for ASIC for 2025. It is important that lenders ensure their systems and processes are sufficient to appropriately respond to hardship notices and work to implement some of the good practices mentioned below.
Lenders should consider taking the following action:
- ensure customers are aware of the availability of hardship assistance;
- allocate a person or team responsible for hardship assistance and dealing with customers who request this;
- liaise with customers to develop tailored solutions rather than applying a generic or standardised approach;
- identify and support customers experiencing financial hardship or vulnerability e.g. refer customers to support services;
- respond to hardship notices in a timely manner;
- ensure hardship assessment processes are easy and efficient for the customer;
- ensure updates are provided to customers on the progress of their hardship notice;
- monitor compliance with legislative timeframes including dates of information requests and customer outcomes;
- keep open lines of communication with the customer during and at the end of the hardship assistance period;
- communicate to the customer clearly regarding the outcome of the hardship notice, including providing specific and detailed information where the application has been denied; and
- provide new and refreshed training to staff in handling hardship notices and vulnerable customers.
Key Findings
Report 783 outlines four (4) key findings which have been summarised in the table below. We have also included some examples of good and poor practices:
| Finding 1: Accessibility of hardship assistance | |
|---|---|
Examples of good practices observed:
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Examples of poor practices observed:
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| Finding 2: Simple processes for assessing hardship | |
Examples of good practices observed:
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Examples of poor practices observed:
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| Finding 3: Communicating effectively with customers | |
Examples of good practices observed:
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Examples of poor practices observed:
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| Finding 4: Supporting vulnerable customers | |
Examples of good practices observed:
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Examples of poor practices observed:
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Background
Section 72 of the National Credit Code enables customers to advise their lender of their inability to meet their obligations under a credit contract. Credit licensees must, therefore, consider whether to vary the customer's credit contract and assist the customer in meeting their obligations. This may include a reduction in payments, deferral of payments or an extension on the term of the loan.
Further Reading:
