The Australian Financial Complaints Authority (AFCA) has flagged concerns over financial institutions neglecting customers seeking assistance due to financial difficulty following a surge in complaints from this cohort in 2023.
AFCA chief ombudsman and chief executive David Locke said the authority had received 5396 complaints from consumers relating to financial difficulty or hardship in 2023, a rise of 25 per cent on the previous year.
Of those complaints, more than half concerned a lender’s failure to respond to a request for hardship assistance and a third related to assistance with home loans.
While Locke noted more people seeking hardship assistance was unsurprising given the challenging economic environment, the amount of complaints received regarding entities who had not actioned a request or contacted the person making the application was disappointing.
“We are concerned about the increase in complaints about financial hardship and about the practices of some lenders. We urge all lenders to identify hardship early and to ensure they provide genuine consideration to a customer’s request for hardship assistance,” he said.
“Lenders were preparing for [applications to obtain financial hardship assistance] 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.
“[A majority of] 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.”
AFCA stated it had also witnessed a significant number of complaints where lenders had provided a standardised response that did not consider the customer’s individual circumstances.
“Care needs to be taken with automated processes. Lenders are required to give genuine consideration to hardship requests,” Locke said.
AFCA banking and finance lead ombudsman Natalie Cameron advised individuals caught in this position to take proactive steps as early as possible to ensure a favourable outcome.
“Don’t wait until overdue repayments and arrears are already accumulating. Act quickly so as many options as possible remain open to you. We’d also encourage people to seek help from a free financial counsellor sooner rather than later,” Cameron noted.
“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.”