The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

5 April 2009


Relieving Mortgage Stress

The Principles: A Common Approach for Assisting Borrowers Facing Financial Hardship

Today I announce a new agreement between the Australian Government and the four major banks, to assist borrowers who are experiencing financial difficulty as a result of the global recession.

The Principles have been negotiated between the Government and the four majors who represent around 80 per cent of the mortgage market.

They are aimed at helping borrowers who may struggle to meet loan repayments if they lose their job and is all about Australians coming together to do what we can to cushion our people from the worst the world can throw at us.

While Australia is weathering the global recession better than most countries, we are not immune from its impacts, and one of these is that unemployment is forecast to rise.

The Rudd Government has consistently said it would do all it can to help cushion the impact of this once-in-a-generation global recession, where both financial institutions and families that find themselves in tough financial circumstances have a mutual interest in working together to pull through this crisis.

The agreement with the banks means they will be able to offer a range of options for assistance to people with mortgages who lose their jobs and fall into financial hardship.

The Principles place obligations on the four major banks to provide temporary relief to borrowers and to provide assistance options that take into consideration the needs of the borrower concerned.

Options for assistance that the banks can offer include:

  • in relation to mortgages, postponement for up to 12 months the dates on which payments are due under the contract (with interest to be capitalised into the loan);
  • an extension of the period of the contract and a reduction in the amount of each payment due under the contract;
  • interest-only breaks on loan repayments; and
  • fee waivers.

Of course, these options won't be appropriate in every case, and banks will make assessments based on the borrowers' ability to meet new contractual obligations in the long term.

But I congratulate the banks for working so co-operatively with the Government on behalf of their customers and encourage all other financial institutions to follow suit and sign up to the principles.

Discussions are already underway with credit unions and mutual building societies, who already have procedures for working with members facing financial hardship, on appropriate participation in this agreement.

Borrowers facing hardship that are customers of one of the four major banks can contact them on:

  • ANZ: 1800 252 845
  • NAB: 1300 661 114
  • CBA: 1300 720 814
  • Westpac: 132 668

If a borrower believes their bank has not lived up to its obligations under the Principles, they should first raise this with their bank's central customer complaints area, and if not satisfied with the response, then contact the Financial Ombudsman Service on 1300 78 08 08 or at

5 April 2009

Attachment A

A Common Approach for Assisting Borrowers Facing Financial Hardship

The deteriorating domestic and international economic outlook will place continued financial pressure on households, as those affected find it more difficult to service housing and personal debt.

It is important that financial institutions have clear and effective arrangements to manage borrowers who are facing financial hardship. In particular, institutions should have in place arrangements that assist borrowers who are experiencing temporary financial hardship.

The Government and the four major banks have agreed a common approach for assisting borrowers facing financial hardship.

The Principles, which apply in relation to all consumer credit contracts, establish temporary and standardised arrangements that are designed to assist borrowers that are unable to meet their contractual obligations due to unemployment or as a result of other (reasonable) causes.

The four major banks will apply the following principles on a case by case basis to assist borrowers manage their way through temporary financial hardship.

In these circumstances, the banks will support their borrowers by:

  1. Temporary assistance options
    • The banks will provide temporary assistance to borrowers who are experiencing financial hardship and have become unemployed or are in difficulty more generally.
    • The banks will work with borrowers to determine the most appropriate assistance option for each borrower. Options include:
      • in relation to mortgages, postponing for up to 12 months the dates on which payments are due under the contract (with interest to be capitalised into the loan);
      • extending the period of the contract and reducing the amount of each payment due under the contract;
      • reducing the limit available to customers on credit contracts;
      • short term reductions in interest rates, or repayments due under the contract;
      • offering different banking arrangements that will better suit the customer's needs;
      • temporary overdrafts on a one-off and temporary basis to suit short-term needs;
      • providing interest-only repayment options on loans; and
      • providing fee waivers.
    • These options will be made available in circumstances where the borrower will be able to meet the new repayment terms and will be able to meet their new contractual obligations in the long-run.
  2. Identification of borrowers in hardship
    • The banks will have systems in place to assist in identifying borrowers who may be experiencing financial hardship.
    • The banks will monitor borrowers and may contact borrowers who default on their contractual obligations. If contacted, the banks will explain, in detail, why an individual has been contacted and explain what assistance may be available to the individual if it is found that they are experiencing financial hardship.
    • The banks may contact customers that exhibit other potential signs of borrower distress, which may include:
      • unusual patterns of usage of credit card products; and
      • requests for significant increases in credit card limits.
  3. Staff training
    • The banks will ensure that they have staff trained to deal with hardship cases.
    • Bank staff will be trained to refer borrowers to appropriate services if they are possibly experiencing financial hardship.
    • The banks will implement and maintain procedures and guidelines to ensure that all staff responsible for dealing with hardship cases perform their duties in a sensitive and effective manner.
  4. Streamlined processes
    • Each bank will have in place and publicise a toll‑free hotline through which borrowers can access a dedicated financial hardship team who can assist borrowers across all consumer credit contracts.
    • Borrowers experiencing financial hardship can apply for assistance using this hotline.
    • The banks will also ensure that mechanisms are in place to allow borrowers to seek information about hardship assistance over the internet or at their nearest bank branch.
    • Access to information about hardship via the toll‑free hotline, internet or through bank branches will be open to borrowers without requiring borrowers to provide evidence of their hardship.
  5. Information on hardship processes
    • The banks will ensure that information is available on hardship processes.
    • The banks will ensure information about its hardship arrangements is made available throughout the branch network, via the internet or is sent to borrowers on request.
  6. Timely assistance
    • The banks will deal with requests for hardship assistance in a timely manner.
    • The banks will ensure that hardship applications are dealt with as quickly as possible.
  7. Financial information and counselling services
    • The banks will provide access to fee‑free internal financial information services on financial hardship or, where requested by the borrower, details about external financial counselling services.
  8. Needs‑based assistance
    • The banks will provide temporary financial hardship assistance based on information about the borrower's individual needs.
    • Borrowers who apply for temporary assistance may need to provide evidence of financial hardship. This will help the banks develop tailored solutions for individual borrowers.
    • Evidence of financial hardship can be satisfied through the provision of the following documents that show a change in their personal circumstances:
      • payslips;
      • bank statements;
      • medical certificates;
      • welfare payment statements; or
      • a statement of financial position and/or income and expenditure.