The watchdog has urged mortgage lenders to focus on improving hardship support for customers in financial distress.
The Australian Securities and Investments Commission (ASIC) has told lenders that despite “significant improvements”, it still has “ongoing concerns” about how lenders provide support for customers in financial hardship.
The call comes as ASIC releases a new report outlining how mortgage lenders are supporting their customers experiencing financial hardship.
The report, released on Thursday (25 September), outlines the progress made since ASIC released its review of hardship assistance offered by the 10 largest home loan lenders.
According to Hardship, not as hard to get help, there have been continued improvements in lender approaches and customer outcomes, including:
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A 58 per cent increase in the number of hardship notices identified by lenders (compared to prior 18-month period).
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Fewer customers dropping out of the assessment process (three lenders saw dropout rates decrease by more than 40 per cent – largely due to a reduction in the paperwork required).
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Shorter approval times for hardship notices being approved by six lenders.
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More proactive communication with customers on their options (lenders were found to be contacting customers prior to their hardship arrangements expiring. At least two more lenders have also implemented check-ins to proactively ask customers if an extension is required).
The report noted that there was an increased number of hardship notices this year, with 78,294 hardship notices recorded in the March 2025 quarter and just over 74,000 in the June quarter (up from 62,969 and 68,167 in the same quarters last year).
The vast majority of hardship notices were from owner-occupiers.
The top reasons for hardship notices relating to home loans were:
- Overcommitment (99,852)
- Reduced income (77,583)
- Medical (58,803)
- Unemployment (54,771)
- Separation (27,443)
However, ASIC flagged that feedback from consumer groups shows that some lenders have been slower to show progress, and there are still concerns with the quality of some of the hardship responses.
This included directing customers to three months of hardship support before referring that customer to the National Debt Helpline, rather than individual support tailored to them.
ASIC commissioner Kate O’Rourke welcomed the progress made by lenders in their approaches.
“Since our review, we have seen lenders work to uplift their hardship practices and to better support their customers experiencing hardship,” O’Rourke said.
“However, we have some concerns about the overall quality of lenders’ hardship responses.
“For example, consumer groups and financial counsellors continue to tell us there are still lenders taking a cookie-cutter approach to hardship, rather than tailoring responses to the customer’s individual circumstances.
“ASIC will continue to monitor lenders’ actions in this area.”
“We urge all lenders to adopt a proactive, continuous improvement approach to supporting their customers experiencing financial hardship, and to ensure adequate focus on customer experience and outcomes in their practices.”
ASIC said it would continue monitoring the progress of lenders requested to provide action plans, including the use of independent reviewers.
The watchdog has not been afraid to penalise lenders for alleged breaches of their obligations towards borrowers.
Last month, ASIC and Australia and New Zealand Banking Group (ANZ) asked the Federal Court to impose a $40 million penalty on the major for failing to respond to customers’ hardship notices within the time required and failing to have proper hardship processes in place.
National Australia Bank (NAB) and its subsidiary Advantedge were fined $15.5 million for failing to respond to customers facing hardship.
In May, ASIC sued Resimac for allegedly failing to “provide appropriate care” when responding to hardship applications from home loan customers.
In 2023, ASIC commenced civil proceedings against Westpac for allegedly failing to process 229 hardship applications.
[Related: ANZ agrees to $240m fine for misconduct]
