Banks are outright ignoring or offering “cookie cutter” responses to a rising number of hardship requests from struggling customers, despite repeated regulatory crackdowns.
Nearly 2,900 customers complained their bank had failed to respond to pleas for assistance in 2024-25, new data from the Australian Financial Complaints Authority (Afca) showed.
Non-responses have risen for four consecutive years, even though lenders are legally obliged to consider hardship requests, the Afca’s lead ombudsman for banking and finance, Natalie Cameron, said.
“People’s requests for hardship assistance are still not being met … despite sustained regulatory scrutiny and targeted efforts,” Cameron said.
Column graph showing complaints made about bank non-responses to requests for hardship assistance
Big banks’ automated systems for hardship requests had generated “cookie cutter” responses and failed to account for individual customers’ circumstances, while smaller lenders lacked even those systems, Afca found.
“We need to see a shift toward more tailored, empathetic responses that recognise the complexity of people’s circumstances and offer genuine help when it’s needed most,” Cameron said.
Financial Counselling Australia’s chief executive, Domenique Meyrick, said customer assistance teams could lack training, licensing or support from the rest of the bank, leaving customers to fall through the cracks.
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“There is no excuse for there being no response when someone reaches out [for] help,” Meyrick said. “This is off the charts in terms of bad.”
Failing to respond to requests for compassionate changes to repayment plans could break pressured customers’ relationships with their lenders, forcing them to turn to extra, higher-risk borrowing to avoid defaulting, Meyrick said.
“Not only is it exacerbating the stress and … damaging trust – it can actually lead, in a very tangible way, to people’s financial situation becoming worse,” Meyrick said.
“Everybody has been on notice that this really matters, so seeing a rise in poor behaviour like no response or not [being] timely, it beggars belief.”
Banks have been under pressure amid actions from the corporate regulator, annual warnings from Afca’s reports and campaigns from financial counsellors.
ANZ has paid a $40m penalty and NAB has paid $15.5m over poor hardship support processes. The Australian Securities and Investment Commission (Asic) has also brought proceedings against Westpac, which remain before the courts.
Lenders have worked to make it easier for customers to provide hardship notices and be assessed for support over 2024-25, increasing the speed and completion rate of assessment processes, Asic reported in September.
But improved access to hardship applications combined with cost-of-living pressures have resulted in a surge in hardship notices, with Victoria recording the highest number nationally, Asic found.
Column graph showing number of hardship notices per quarter rising from 2022 to now
The data from Afca’s annual review, shared exclusively with Guardian Australia before its release on 22 October, showed rising complaints regarding home loan repayment struggles were offset by declining rejections of calls for help, with complaints related to financial difficulty falling to 4,764.
The ombudsman received more than 100,000 customer complaints about financial institutions in 2024-25.
A financial counsellor with the national debt helpline, Claire Tacon, said borrowers who asked their lender for lenience were entitled to a response and should contact Afca if they were met with silence.
“It’s really disappointing that people are coming to us after trying to resolve their issue with the banks, speaking to the hardship department there, but coming away not being assisted and not knowing what their rights are,” Tacon said.
“Afca will contact the bank [then] usually it is resolved, but it’s later than it should have been, and it’s after a lot of stress and worry for the customer.”
One home loan borrower, a long term client of her bank, experienced periods of hardship in 2022 and again in 2023. She alerted her bank but the bank issued a default notice and began enforcement action that April.
In 2025, Afca found the bank had no right to take that action before responding to the financial hardship requests, requiring the bank to pay $2,250 in compensation and refund any enforcement costs and default rates of interest it had charged the borrower.