Banks body offers hardship help as tougher times loom


Australia’s banking industry is raising awareness of remedies for customers facing temporary financial difficulties

By Rob McKay | June 7, 2013

Australia’s banking industry is moving to raise awareness of remedies for customers facing temporary financial difficulties.

With economic indicators pointing to challenges ahead for businesses and low confidence among producers and consumers, the Australian Bankers Association (ABA) says it is responding to stakeholder and customer concerns about existing practices of banks the hardship assistance offered by banks.

The ABA says the initiative has relevance to small business as well as individual customers.

"The financial hardship package is designed to assist bank customers who are struggling to make repayments on their loans with the bank ABA CEO Steven Münchenberg states.

"If the customer is a small business owner and experiencing financial difficulty, then they should not hesitate to contact the bank to discuss their situation.

"There is also information on the banking industry’s website, www.doingittough.info which may be helpful in understanding the ways banks can assist.

"The Code of Banking Practice is the banking industry’s customer charter on good banking practice.

"The Code establishes the banking industry’s key commitments and obligations to customers on standards of practice, disclosure, principles of conduct and dispute resolution.

"The Code is contractually binding on banks that have adopted it."

Clause 28 of the 2013 version of the Code outlines a bank’s obligations when an individual or small business customer is experiencing financial difficulties with their credit facility, including:

  • helping customers overcome their financial difficulties with any credit facilities they have
  • dealing with an authorised financial counsellor or representative at the customer’s request
  • responding promptly to requests for assistance
  • not combining accounts or assigning debts while the bank is actively considering the customer’s financial situation or a hardship arrangement is in place
  • informing customers about the hardship provisions of the National Credit Code and the Code of Banking Practice, if the bank considers they apply to the customer’s circumstances
  • if a bank identifies that a customer may be experiencing financial difficulties during the course of their personal dealings with the customer, they may contact the customer and discuss their situation
  • informing the customer in-writing of the bank’s decision whether or not to provide assistance and reasons for the decision;
  • confirming in-writing the main details of arrangements.

The Code of Banking Practice can be accessed on the ABA’s website at www.bankers.asn.au.

"Our research tells us that only one in four bank customers know that banks offer hardship assistance," Münchenberg adds.

"We would like to change that.

"We want to let customers know that banks understand that life can be unpredictable.

"Many customers are worried about approaching their bank if they’re having problems making repayments, but banks have dedicated staff in their financial hardship teams and programs in place to assist their customers through temporary financial difficulties.

"If customers find themselves in financial difficulty, they need to take some action because money troubles don’t usually go away on their own. Don’t ignore the problem and talk to your bank as early as you can. Customers can also call an independent financial counsellor or ask your bank for a referral to an independent financial counsellor."

"The impacts of the global financial crisis have meant that some sectors of our economy are struggling compared to others and this can affect communities as some customers may have lost their jobs or had their working hours reduced.

"Unemployment is not the only reason why customers may be unable to make repayments.

"There may be other factors, such as illness, injury or a relationship breakdown which can also cause financial difficulties."

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