Background
In May 2024, ASIC released Report 782 Hardship, hard to get help: Findings and actions to support customers in financial hardship (REP 782) and its summary version Report 783 Hardship, hard to get help: Lenders fall short in financial hardship support (REP 783) finding lenders fell short in supporting customers in hardship.
ASIC has now issued a follow‑up report, ‘Report 815 Hardship, not as hard to get help: But lenders still need to do more’ (REP 815), summarising the actions ASIC has taken and some of its observations since the release of REP 782 and 783, based on extended data collection from an additional cohort of 20 lenders.
ASIC has acknowledged ongoing improvements in lenders’ practices and in customer experience and outcomes, including more hardship notices being identified by lenders, fewer customers exiting the assessment process and more proactive communication with customers about available options.
However, ASIC noted that some lenders have been slower to improve and concerns remain about the quality of some hardship responses.
Key observations
ASIC’s key observations in REP 815 are outlined in the table below.
Item | ASIC observation | |
Access to hardship assistance | There was a 58% increase in the number of hardship notices relating to home loan accounts compared to the 18-month period before REP 782 and 783 were released. ASIC attributed this increase to lenders providing more hardship information online, removing incorrect statements that financial hardship is only short-term or caused by a specific life event and increasing staff training on identifying financial hardship. | |
The hardship assessment process | Fewer customers are abandoning the hardship process and lender approval timeframes are reducing. ASIC attributed these outcomes to lenders:
| |
Communicating with customers | The proportion of customers whose payments were reduced or deferred and who immediately entered arrears after their hardship assistance period ended is generally decreasing. For two lenders reviewed, there was a 28% reduction compared to the previous 18-month period. Lenders are now generally contacting customers before their hardship arrangements expire. ASIC noted that at least two lenders have also introduced proactive check-ins to ask customers whether an extension of assistance is required. ASIC also observed lenders have improved communications at the end of hardship arrangements, helping customers understand their obligations and reducing the likelihood of them immediately falling back into arrears. |
Room for improvement
Despite improvements, ASIC remains concerned about the overall quality of lenders’ hardship responses, including some lenders’ continued reliance on generic, ‘one‑size‑fits‑all’ templates that fail to account for individual circumstances.
With cost-of-living pressures persisting, lenders are expected to actively support customers experiencing hardship and ASIC’s ongoing focus on hardship practices remains a priority.
Top tips to improve hardship practices
ASIC expects all lenders to have already self‑assessed against ASIC’s findings in REP 782 and 783 and implemented targeted improvements.
ASIC also expects a proactive, continuous‑improvement approach that centres on customer experience and demonstrable outcomes – not process box‑ticking.
Although ASIC has paused formal data collection, it will continue to oversee progress by lenders required to submit action plans, including reviewing reports from independent reviewers.
Below are five practical recommendations to guide improvements to hardship practices.
Enhance access to hardship assistance: remove any focus on hardship being “short‑term” or the result of a specific life event, enable hardship identification across all channels (phone, email, web form, web chat) and ensure your teams are equipped to identify hardship notices through every available channel. This approach helps ensure no customer in need falls through the cracks.
Streamline intake processes: request only what’s necessary from customers, accept verbal information where suitable and move away from blanket/automatic document requests. This approach reduces unnecessary barriers and helps customers access support more quickly.
Establish clear end‑of‑assistance processes: provide timely and clear communications as customers approach the conclusion of their hardship arrangements, introduced proactive check-ins and offer straightforward pathways for extensions, set out easy-to-follow instructions for restarting repayments and use SMS or email reminders to keep customers informed and supported throughout the transition.
Facilitate tailored hardship solutions: provide genuinely tailored solutions by carefully considering each customer’s unique circumstances and level of vulnerability. Move away from generic one-size-fits-all responses and ensure your hardship arrangements are flexible, fair and proportionate to each customer’s needs.
Uplift quality assurance and governance frameworks: regularly review a sample of hardship files to ensure that policies are being followed and that hardship assistance is being provided in line with ASIC’s expectations. Test and refine customer communications, including letters and call scripts, and senior management and/or Boards should be updated as to hardship trends and outcomes.