Skip to content   Skip to footer navigation 

Australians in mortgage stress say banks aren't lending a hand

A rise in complaints shows big banks aren't doing enough to help people in financial hardship.

single mother in financial stress
Last updated: 18 April 2024


Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • The number of complaints about financial difficulty and home loans are on the rise
  • Advocates say banks need to do better at proactively offering financial hardship support
  • They say the big four banks also need to provide more support to customers who are struggling financially  

A growing number of Australians facing mortgage stress are lodging complaints alleging that their home loan lenders aren't doing enough to support them through financial difficulties.

Complaints to the Australian Financial Complaints Authority (AFCA)  involving financial difficulty rose 25% in 2023 and the body says they are concerned about the way banks are handling requests for help.

Of the almost 5400 financial difficulty complaints received by the AFCA last year, a third related to home loans.

Calls for help going unanswered

AFCA's chief ombudsman David Locke says in many instances lenders aren't even responding to customer requests for financial hardship assistance, something they are required to do. Locke says this situation is "completely unacceptable". 

"Over half of the complaints that we're getting now are from people who have gone to their lender requesting hardship assistance, and they've not even had a response to that request," he says. 

 In many instances lenders aren't even responding to customer requests for financial hardship assistance

At the same time, calls to the National Debt Helpline are soaring, with housing issues such as mortgage stress and rental arrears the most common among those seeking help.

Almost 15,000 people contacted the helpline in February this year. According to Financial Counselling Australia co-CEO Dr Domenique Meyrick, that number represents a 17% increase on the same month in 2023. 

"The big banks have improved, according to our research, over the last few years, but there is still a way to go. We still have people calling in to get hardship assistance and not getting an adequately tailored response to their particular circumstance," Meyrick says. 

Consumers unaware of their rights 

Meyrick says many consumers are unaware of their rights when it comes to requesting financial hardship assistance, such as payment pauses and loan extensions. 

"There are varying levels of awareness, it really depends on what lender you are with, how prominent their information about hardship is and how much information they share with consumers," she says. 

"Even if you have something on your bill or something on a website that says you can seek hardship, if you fill out that form, or call that number and you get no response, that's not good enough."

"People aren't aware of their rights," she adds. 

If you fill out that form, or call that number and you get no response, that's not good enough

Dr Domenique Meyrick, Financial Counselling Australia

She says in many instances people aren't getting the right response from their banks and have to turn to a financial counsellor to advocate for them, when the banks should be providing appropriate assistance in the first instance.

The Australian Banking Association (ABA) didn't respond to our questions about banks failing to provide support, but said people should reach out early to their banks.

"Banks have dedicated and highly experienced teams ready to help Australians facing financial hardship," they say. 

couple talking to bank manager

Many people are having to turn to a financial counsellor because their bank won't respond to their requests for assistance.

Jonathan's story: 'You guys don't care about people' 

When Jonathan's* father died of cancer, he fell into depression and developed a heavy addiction to alcohol. He was soon unable to work and ended up borrowing around $35,000 from family and friends to go through a private rehabilitation program. 

While trying to recover from alcoholism, his debts grew and he fell further behind on the mortgage on his home in Melbourne's northern suburbs. By the time he reached out to the Commonwealth Bank for help, he was desperate. 

"The first person I spoke to at the bank was lovely, but one day she disappeared and I just had a new case manager. They kept changing the person on me and I had to repeat my story at least seven times. Every time someone new would call me, I would have to repeat my story over," he says. 

"I wasn't working, I was on lots of medications… they kept wanting to see more and more paperwork. I said to them, 'it seems that you guys don't care about people. All you guys care about is money'." 

They kept changing the person on me and I had to repeat my story at least seven times

Jonathan* CommBank customer

Eventually Jonathan was able to get onto a senior case manager who is now negotiating extending the term of his loan and bringing his arrears into the remaining mortgage balance. The bank has also paid him a small amount of compensation for their poor treatment of him. 

CommBank says 'contact us early'

A spokesperson for the Commonwealth Bank echoed the response of the ABA, urging people to contact them early to find a tailored solution. 

"This could include customised payment arrangements, such as switching the loan to interest only for a period of time, or a loan term extension," they say. 

"We understand that every customer's financial situation is not only unique, but ever evolving, which is why we encourage anyone who is experiencing financial difficulty or worried about their future debt payments to contact us early and as their situation evolves."

Banks need to do better

Stephanie Tonkin, CEO of the Consumer Action Law Centre, who assisted Jonathan, says his case should have been handled better by Commonwealth Bank. 

"Hardship teams need to be trained in trauma-informed approaches to working with the customers, who are doing it really tough and be as accommodating as possible, because it's in everyone's interest for the customer to get back to good health and back on their feet and start paying again," she says. 

Matthew Martin, legal director of Mortgage Stress Victoria, says lenders don't make enough information about financial hardship assistance publicly available for consumers in need. 

There should be some minimum standards that customers can expect as a baseline response

"When a consumer does make a hardship application to a lender, the responses vary greatly, not only from lender to lender, but also team to team within the same lender, or even different front-line staff members within the same lender," he says. 

Martin says while each response should be tailored to the needs of the customer in hardship, there should be some minimum standards that customers can expect as a baseline response. He adds that these should be agreed upon across the industry and made publicly available to offer consumers some assurance. 

An industry-wide issue

Martin says the poor responses to hardship requests they are seeing are pervasive across the industry and aren't limited to smaller lenders. The big four banks – Commonwealth, NAB, ANZ and Westpac – also need to lift their game. 

A report by the industry's own Banking Code Compliance Committee found that in the first six months of 2023, breaches of obligations for dealing with customers in financial hardship increased by nearly 40%. 

*Not his real name.

If you need help managing an inadequate financial assistance response with your bank, call the National Debt Helpline on 1800 007 007 for free, confidential and independent information and advice.

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking at CHOICE.

Stock images: Getty, unless otherwise stated.