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Brokers and lenders need to devise better industry practices for responding to borrowers in financial hardship a report by ASIC and Consumer Affairs Victoria has found.
The report, Helping home borrowers in financial hardship, released yesterday, found that while some industry participants were responding well to customer needs there is room for improvement.
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“With forecasts of growing unemployment we can expect to see increasing numbers of borrowers experiencing mortgage stress,” ASIC senior executive leader of deposit takers, credit and insurance providers Greg Kirk said.
According to the report information about financial hardship is usually only provided to borrowers following default, making it very difficult for borrowers to take positive action.
Brokers generally have very limited understanding of their role in responding to financial hardship, the report said, while lenders appeared to offer short-term alleviation assistance rather than genuinely responding to borrowers’ specific situations.
“It’s important that lenders and intermediaries have processes and procedures in place to provide constructive responses to financial hardship,” Mr Kirk said.
“These include procedures to identify customers in hardship, to provide clear and timely information to customers on their right to seek relief and to engage sufficiently with a customer’s circumstances in order to provide appropriate and flexible assistance.”
