Skip to content
Banking

EMBARGOED: AFCA worried by rising complaints over handling of hardship

Australian Financial Complaints Authority 3 mins read
  • Media:

PLEASE NOTE: EMBARGOED UNTIL 00:05 AEDT Wednesday 3 April 

The Australian Financial Complaints Authority (AFCA) is concerned by a rise in complaints involving financial difficulty, especially lenders’ handling of customer requests for hardship assistance.

Complaints involving financial difficulty, a category that includes disputes over hardship assistance, rose 25 per cent in 2023, the financial sector ombudsman service reported today. Of the 5,396 complaints, a third related to home loans.

“We are concerned about the increase in complaints about financial hardship and about the practices of some lenders,” AFCA’s Chief Ombudsman and Chief Executive Officer, David Locke, said. “We urge all lenders to identify hardship early and to ensure they provide genuine consideration to a customer's request for hardship assistance.”

Given the challenging economic environment, AFCA was not surprised by the increase in consumers seeking hardship assistance, Mr Locke said. “Lenders were preparing for this too and we acknowledge the investments some have made in specialist hardship teams and better processes. But the rise in complaints tells us there is still work to do.”

He said it was concerning that more than half of financial difficulty complaints to AFCA in 2023 were about a lender’s failure to respond to a request for hardship assistance. This is particularly pronounced for smaller lenders and Buy Now Pay Later (BNPL) providers.

“These are not complaints about what the lender’s decision was, but consumers saying there was no response at all. Failure to respond to such a request is a breach of the lender’s obligations and there is no excuse for this,” he said.

AFCA was also seeing complaints where lenders had provided a standardised, or “cookie cutter”, response that did not consider the customer’s individual circumstances. “Care needs to be taken with automated processes,” he added. “Lenders are required to give genuine consideration to hardship requests.”

Under the National Credit Code and the Banking Code of Practice, banks are required to work with customers to find a sustainable solution to financial hardship, and to do that by considering their individual circumstances.

AFCA’s Lead Ombudsman, Banking and Finance, Natalie Cameron, said other issues AFCA was seeing included lenders issuing default notices to consumers who had agreed to repayment arrangements, lenders placing unnecessary barriers to financial counsellors assisting consumers, and debt recovery action being taken while a matter is still before AFCA, which is not permitted. 

Ms Cameron said all lenders should ensure they provide appropriate assistance to people experiencing vulnerability. “Vulnerable complainants are not always identified or given the care required,” she said. “Sometimes they are simply not in a position to navigate the process and provide the required information in the requested format.”

The Australian Securities and Investments Commission (ASIC) has been undertaking a review of hardship applications and wrote to lenders last year calling on them to make sure they supported customers appropriately.


Breakout – What to do

AFCA’s Lead Ombudsman, Banking and Finance, Natalie Cameron, says borrowers should contact their lender to request hardship assistance as soon as possible if they are starting to find themselves in financial difficulty.

“Don’t wait until overdue repayments and arrears are already accumulating. Act quickly so as many options as possible remain open to you,” she says. “We’d also encourage people to seek help from a free financial counsellor sooner rather than later.”

“Borrowers who are not happy with the response to a hardship request can make an internal complaint to their lender to have the decision reviewed. The bank generally has 30 days to respond to a complaint.

“If they remain unhappy after the complaint has been considered by the lender, or the complaint hasn’t been considered in time, they can access AFCA’s free and impartial dispute resolution service.”


Media enquiries 
media@afca.org.au

Enquire about embargoed interviews Thursday 28 March or Tuesday 2 April


About us:

About AFCA – The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent help with financial disputes. AFCA is a one-stop-shop for consumers and small businesses who have a dispute with their financial firm, over things such as banking, credit, insurance, advice, investments or superannuation. Where an agreement cannot be reached between parties, AFCA can issue decisions that are binding on financial firms.


Contact details:

media@afca.org.au

Media

Images
David Locke, Chief Ombudsman and Chief Executive Officer of the Australian Financial Complaints AuthorityDavid Locke, Chief Ombudsman and Chief Executive Officer of the Australian Financial Complaints Authority

AFCA_David Locke_20210507_0054.jpg

David Locke, Chief Ombudsman and Chief Executive Officer of the Australian Financial Complaints Authority
Download media

More from this category

  • Banking, Finance Investment
  • 01/04/2025
  • 15:38
Monash University

Monash expert: RBA rates hold in anticipation of ‘Liberation Day’

A Monash University expert is available to comment on the Reserve Bank of Australia’s decision today to hold interest rates. Dr Isaac Gross, Department of Economics, Monash Business School Contact: + 61 490 819 643 or isaac.gross@monash.edu Read more of Dr Gross’ commentary here: Monash Lens The following can be attributed to Dr Gross: “The RBA held interest rates steady today as they await for the next set of quarterly inflation figures to see where the Australian economy is heading. January's inflation numbers were very low, and if that were to be repeated in April's numbers interest rate cuts would…

  • Banking, Insurance
  • 01/04/2025
  • 09:52
Australian Financial Complaints Authority

AFCA enhances support for employees affected by domestic violence

The Australian Financial Complaints Authority (AFCA) is proud to announce significant enhancements to its family and domestic violence support policy, reaffirming its commitment to…

  • Contains:
  • Banking
  • 27/03/2025
  • 18:07
The Department of the House of Representatives

Economics Committee reports on ASIC

TheHouse of Representatives Standing Committee on Economicshas released thefinal reportfor itsreviews of the Australian Securities and Investments Commission (ASIC) annual reports of 2021, 2022 and 2023. The Committee’s Chair,Dr Daniel Mulino MP, said that the report covered key issues examined by the Committee during the 47thParliament. Dr Mulino noted that ASIC had been subject to extensive parliamentary scrutiny over the past three years, including by other committees. 'Similar to our colleagues on the Parliamentary Joint Committee on Corporations and Financial Services, the House Economics Committee asked extensive questions about ASIC’s enforcement approach,' he said. 'Members also probed how ASIC measures…

Media Outreach made fast, easy, simple.

Feature your press release on Medianet's News Hub every time you distribute with Medianet. Pay per release or save with a subscription.