Key Takeaways

ASIC has published its expectations of retail lenders in dealing with expiring loan deferrals (as a result of COVID-19) over the next few months.

Lenders are expected to do all that is necessary to ensure credit activities are performed 'efficiently, honestly and fairly.' In doing so, lenders are asked to put in place processes to allow for an orderly transition that delivers fair and appropriate outcomes for customers.

ASIC will continue to closely monitor lenders’ responses to assist customers experiencing financial difficulties as a result of COVID-19.

Summary

As repayment deferral periods are due to expire, ASIC has encouraged lenders to:

• make reasonable attempts to contact customers in a timely manner, allowing customers reasonable time to consider their options prior to the deferral period expiring; and
• provide all necessary information to assist customers to make a decision; and
• have a process in place that is easy for consumers to understand and navigate.

If a customer does not respond to communication, lenders are encouraged to utilise a range of communication channels to contact the customer.

If customers cannot resume repayments, lenders are expected to:

• make reasonable efforts to interact with a customer directly to gather more personalised information. The lender is to consider tailoring the options available based on individual circumstances to ensure fair and appropriate decisions are made.
• implement flexible internal processes that empower and encourage staff to offer personalised assistance to ensure the customer’s needs are genuinely addressed.

Consumers must always be notified of their rights to complain to AFCA in the event they are not satisfied with the decision made by the lender.

Implications

The guidelines encourage lenders and businesses impacted by COVID-19, to continue to work together during these unprecedented times.

While the published expectations focus on how retail lenders should manage the expiry of repayment deferrals, ASIC has made it clear that lenders should consider these guidelines more broadly when responding to customers experiencing financial difficulties due to COVID-19.

While most lenders have already committed to a further deferral period for those still in severe hardship at the end of September 2020, it is hoped a high level of continued engagement between lenders and customers will reduce those numbers.