In the face of rising living costs and interest rate hikes, many Australians are grappling with financial difficulties. To address this urgent issue, the Australian Securities and Investments Commission (ASIC) has issued a compelling call to banks, credit institutions, and lenders, urging proactive customer support. 

Regulatory Commitments and Customer-Centric Hardship Assistance 

ASIC has emphasized that, in line with section 72 of the National Credit Code, credit providers are obligated to assess potential modifications to customers’ credit contracts when they are notified of their inability to meet credit obligations. Providers must also ensure that their credit activities are conducted with utmost efficiency, honesty, and fairness. Crucially, they are tasked with transparently informing customers about when and how to seek hardship assistance. 

Financial hardship assistance encompasses both temporary solutions like deferred payments and permanent modifications such as structured payment plans. Applicants must furnish proof of their hardship, including its reasons, current income, major financial expenses, and their capacity to meet repayments. 

The Short-Lived Effect of Credit Arrangements 

Customers worried about enduring effects on their credit scores when pursuing hardship arrangements can find reassurance in the knowledge that these effects are temporary. Credit reports for credit cards or loans only reflect the months when a hardship arrangement is in effect. In cases of permanent variations, the month when the loan terms are altered is noted, without further details. Moreover, these listings will only remain for 12 months. 

Continual Support for Customers 

In cases where a hardship application is approved, lenders are expected to maintain open lines of communication with customers as the assistance period nears its conclusion. They should evaluate the customers’ most current financial circumstances and decide if additional support is necessary. This process also entails ensuring that customers comprehend how any remaining arrears will be handled once the hardship assistance period concludes. 

For cases where hardship assistance is denied, lenders must provide written explanations for their decisions. Additionally, clients should be informed about alternative courses of action, including the option to file a complaint with the Australian Financial Complaints Authority (AFCA) regarding the decision.