Bank’s actions over loan debt and hardship application reasonable

Categories:

Vulnerable customers and hardship decisions, Lending,

Summary:

In January 2026, Angela complained that the bank had discouraged her from applying for hardship assistance in 2024 and 2025, although the bank approved a variation to the vehicle loan on hardship grounds in in March 2026. She said it gave her incorrect information about assistance and failed to refer her to financial mentoring.

Published:

October 2026

She also complained that the communication from the bank’s collections area had caused significant distress and $1,300 in medical expenses. In addition, she complained that the bank acted unfairly, and improperly put an approved hardship arrangement on hold. Lastly, she complained that the bank delayed or obstructed her requests for personal information.

Our investigation

From examining the correspondence, we learned Angela had made a request in November 2024 to waive the debt. The bank asked for more information before it would consider the request, but Angela did not supply the information. In December 2024, she confirmed that this request had not been for hardship assistance, and that she would not be applying for such assistance. We found no evidence to suggest the bank had discouraged her from applying for hardship assistance.

The bank’s records showed it agreed to several repayment arrangements during 2025 to help Angela clear her arrears. Angela’s financial difficulty arose from a continuing and long-term illness. Short-term hardship assistance would not have enabled her to sustainably resume repayments.

The bank’s records also showed repeated arrears on the loan, which had resulted in overdue repayment reminders and repossession notices. We found the contact from the bank’s debt collection area was reasonable and proportionate.

During the settlement negotiations, Angela made counteroffers and requested compensation and personal information. The bank was entitled to revise and withdraw its goodwill offer while negotiations continued. We found it did not act unfairly or in bad faith. However, we considered the bank’s decision to put a hardship arrangement on hold during our investigation was inappropriate, although the bank reversed its position that day so any impact was short-lived.

As for the bank’s responses to Angela’s information requests, we found the bank supplied information it held through several channels and offered her paper copies. It had therefore taken reasonable steps to meet its obligations under the Privacy Act 2020 to respond to her privacy request.