TRANSCRIPT
Few have avoided the financial strain of the past two years, including Associate Professor Mim Fox - a qualified academic with a stable job.
In 2022, Ms Fox had a mortgage with her bank.
She says her fixed term loan ended at the same time as interest rates started increasing significantly.
"And within within a matter of two or three months I had a mortgage repayment rate increase with of $1200 a month. This was impossible to fund on my salary, and so I went into a local branch to speak with them about the options that were available to me."
After first suggesting a credit card, her bank ultimately told her to apply for financial hardship - an application that went unanswered.
"The online system said it would get back to me within a matter of days. I did not receive any response. And after nine months I then received a letter in the mail telling me that they were aware that I had applied for financial hardship and were giving me $400 with no reason why they were doing that. No one in those nine months had ever contacted me about my application or discussed it with me. And in the meantime I had refinanced and moved to another bank."
And it seems her situation isn't isolated.
A new report by ASIC [[Australian Securities & Investments Commission]] looked data from 20 lenders between July 2022 and December last year.
It found more than a quarter of a million hardship notices were received on loans with a median value of $312,000.
And that the the top five reasons for being unable to make repayments included over-commitment, reduced income, medical issues, unemployment and separation.
The chairman of the Australian Securities and Investments Commission [[ASIC]], Joe Longo, says banks and lenders are over-promising and under-delivering.
"Banks and lenders have legal requirements under the national credit code on how they handle requests for hardship assistance. What this report shows, however, is that banks and lenders are falling short of the community's expectations, and they are falling short of our expectations, of ASIC's expectations. Simply put, are letting Australians down when the hard times hit. In the worst cases, lenders ignore hardship notices and requests and effectively have abandoned customers who need it in their time of need."
The report examined the practices of ten lenders, gathered data from 30 lenders, looked at 80 case studies, and spoke to over 170 staff.
ASIC Commissioner Alan Kirkland says what they found was that banks and lenders are not doing enough to help Australians in times of need.
"We found that banks often make it hard to ask for assistance, when they did they were put through convoluted processes, communications weren’t up to scratch and as a result of a third of people were dropping out of the process. We expect banks to make it easier, to tell people that hardship assistance is available, to make it easier for them to apply, to respond appropriately and tell them what's happened with their application, and to help people at the end of a period of assistance."
According to the watchdog, lenders aren't offering solutions for individual circumstances with 40 per cent of those who receive help falling immediately arrears once it ends.
Mr Longo says each lender and bank will be briefed on the findings that affect them and be required to come up with plans to meet the gaps they've identified.
"But essentially, the real remedy here, what's really going to affect the most Australians is real time improvement in how the hardship applications are dealt with. Court action, we will take action where the circumstance is warranted. But what's really going to have practical impact here is real time improvement in the bureaucratic, too often bureaucratic practices that we're seeing."
The Consumer Action Law Centre's Stephanie Tonkin welcomes this report.
"Banks are reporting multi-million and billion dollar profits and against that backdrop families are skipping meals in order to keep the lights in in order to pay their mortgage keep the roof over their heads. Now more than ever customers need their banks to step down alongside them and walk this cost of living crisis with them."
The banking sector is keen to note that they performed better than non-bank lenders in the report, while highlighting the proportion of people who DID receive hardship assistance.
The Australian Banking Association's Anna Bligh admits there is room for improvement.
"Of all the customers who put in a full application 94 per cent of them got approved, so my message out there to people if you're doing it tough, don't do it alone, reach out , banks are helping literally thousands of Australians every single week."
And as for Associate Professor Fox, who teaches and researches social hardship every day, she says there are no avenues open to people who do not have the personal resources they might need to advocate for themselves.
"To find myself in a situation when I'm in a stable high paid job I’m educated I’m able to advocate for myself and to still find myself in this situation where the doors are closed, it was astounding to me that that could happen and made more so much more aware of what was happening to everyone else in the sector."
