ABA announces financial hardship package

by AB04 Jun 2013

Australia’s banks, in consultation with consumer and community groups, have developed a package of initiatives that promotes good practice, clearer hardship processes and provides useful information to support customers with money troubles.

The financial hardship package responds to concerns raised by stakeholders about the existing practices of banks and that bank customers have a general lack of awareness about the hardship assistance offered by banks.

Steven Münchenberg, chief executive of the Australian Bankers’ Association (ABA), says research indicates only one in four bank customers know that banks offer hardship assistance.

“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.”

“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.”

The financial hardship package consists of:

  • Industry guideline on financial hardship – provides practical guidance on how banks can support customers in ways that meet and, in some areas exceed, their legal and Code of Banking Practice obligations. The industry guideline outlines a framework for banks that balances standardised access to financial hardship assistance with the need for flexibility when responding to customers’ individual circumstances.
  • Doing It Tough consumer website (www.doingittough.info) has been revamped to reflect changes in the law and the 2013 Code of Banking Practice. Consumers can find information about how banks can help with temporary financial difficulties and access a list of phone numbers for the financial hardship teams at each bank.
  • Consumer fact sheet on financial hardship – to better support customers, the fact sheet has been developed to provide information about financial hardship, including the options available and the steps involved when seeking hardship assistance.
  • Website disclosure industry commitment – to improve access to information about financial hardship, banks will have a new button on their websites’ homepages – “Are you experiencing financial difficulty?” from the end of July this year. With one click, customers will be linked to information including:

– phone numbers for the bank’s specialised financial hardship team;

– how to get hardship assistance;

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– the types of arrangements which may be available;

– links to relevant information including the Doing It Tough website and the Financial Counselling Australia (FCA) website which helps customers find a financial counsellor close to home and provides a Debt Self Help tool; and

– details about special relief packages offered by banks, such as emergency support for bank customers and communities following a natural disaster.

  • Standardised forms – to simplify processes for financial counsellors acting on behalf of customers, standardised forms have been developed, in consultation with FCA. The forms include a Statement of Financial Position and Financial Counsellor Authorisation Form, and are available to financial counsellors via the FCA website: http://www.financialcounsellingaustralia.org.au
  • Branch disclosure industry commitment – to promote greater awareness of hardship assistance and support available, banks have agreed to have displays in branches, such as a poster, TV presentation, counter card and brochures encouraging customers to ask for help if they need it. This initiative will be rolled out by the end of October this year.
  • Training industry commitment – to ensure bank staff across the industry is aware of their responsibilities and banks’ hardship programs, banks have agreed to incorporate a minimum standard of training into their existing employee training packages. The review will be completed by the end of October this year, with new training programs being implemented over the following three months.