Australians experiencing financial stress are being urged to ask their bank or lender for help, after new research revealed that almost half of Australian adults with debt struggled to make repayments in the past 12 months.
Research from the Australian Securities and Investments Commission (ASIC) found 47 per cent of Australian adults with debt – about 5.8 million people – struggled to make repayments during the past 12 months, with 64 per cent citing cost of living pressures as the reason.
Other top reasons included a reduced income (39 per cent), unexpected expenses (37 per cent), unemployment (23 per cent), being overborrowed or overcomitted (22 per cent) and a medical situation (19 per cent).
Almost every person surveyed who encountered financial hardship said they had experienced negative side effects such as stress, anxiety, loss of sleep or a decline in physical health or appearance.
Despite this, only 20 per cent had ever sought financial hardship assistance, and more than half said they were not even aware they were entitled to ask their bank or lender for help.
Thirty per cent of Australians said they would not seek a hardship assistance arrangement from their lender because they were worried it would cost them more in the long run, feared it would negatively impact their credit score or didn’t think their lender would do much to help.
Meanwhile, 42 per cent said they would rather sell their belongings or assets and 40 per cent said they would rather get a second job before they applied for financial hardship assistance, findings which ASIC Commissioner Alan Kirkland labelled “concerning”.
“Customers in hardship are entitled under the law to request assistance,” Mr Kirkland said.
“These findings should be top of mind for lenders when supporting Australians in financial hardship.
“The message for Australians experiencing financial stress is that banks or lenders have a responsibility to support customers.
“If you are worried about being able to make your repayments, you’re entitled to ask your bank or lender for help.
“If you aren’t happy with your bank or lender’s response, make a complaint and, if that doesn’t resolve the issue, contact the Australian Financial Complaints Authority.”
ASIC has launched a campaign to encourage Australians who are struggling financially to ask their bank or lender for help.
The campaign follows the release of an ASIC report in May which found lenders weren’t doing enough to support customers experiencing financial hardship, with some lenders found to have ignored hardship notices and effectively abandoned customers who required their support.
“Seeking financial hardship assistance is a right, and lenders are required to respond to every request for hardship assistance,” Mr Kirkland said.
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