Australian banks are entering the next phase of COVID-19 support, as automatic loan deferrals come to an end and demand for extensions falls.

New data from Australia’s largest banks shows that 91% of deferred loans have resumed repayments. Just 5% of deferred business loans and 13% of deferred housing loans are yet to resume repayments.

While this is an encouraging sign of recovery, it’s clear that there are still Australians who need assistance to get through the pandemic and the banks are working directly with those in hardship on an individual basis to find the right solution.

Banks launch new phase of pandemic support

The next phase of support will involve assistance from specialised hardship teams for customers who are unable to make reduced repayments or restructure their loans.

These expanded teams have extensive experience working with customers in financial difficulty due to the loss of a job, a relationship breakdown or many other common causes of financial difficulty.

As part of this support, banks have developed an industry-wide, consistent approach to hardship and a new online tool to guide customers in financial hardship and improve transparency.

“This is about ensuring that no customer is left in the dark as we emerge from the pandemic. It represents a compact between banks and their customers as we navigate the uncertain path ahead”, Ms Bligh said.

“Customers can expect a thoughtful and compassionate approach, with clear and transparent explanations, regardless of who they bank with. This step-by-step guide will help customers navigate the path out of the pandemic.”

As deferrals and government support measures wind down, banks are reassuring their customers that continued tailored support is available to those who are still struggling.

“Australian banks will continue to help customers and businesses turn the corner after the pandemic, while providing a fair and compassionate approach to those who can’t get back on their feet”, Ms Bligh said.

Ombudsman Kate Carnell welcomes the new Financial Assistance Hub

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell is encouraging struggling small businesses to use the ABA’s new financial assistance hub.

“This initiative by the ABA shows the banks are taking proactive steps to assist small businesses experiencing financial hardship,” Ms Carnell says.

“While it’s good news that 91% of deferred loans have resumed repayments, there are still a number of small businesses hurting out there.

“More than 11,000 business loans remain deferred and we know there were 493,000 businesses still receiving JobKeeper in December 2020.

“With government support measures including JobKeeper set to end next month, the number of small businesses in financial hardship is expected to rise.

“The financial assistance hub can help struggling small business owners who are unable to meet reduced payments or restructure their loans, find a tailored solution.

“I congratulate the ABA for taking a compassionate approach as small businesses try to get back on their feet.

“Small businesses under financial strain should make use of this supportive online tool.”

The new Financial Assistance Hub can be found here. 

Banks developed the site in collaboration with consumer groups including Financial Counselling Australia and the Rural Financial Counselling Service, as well as the Australian Small Business and Family Enterprise Ombudsman, the Australian Financial Complaints Authority and the Australian Securities and Investments Commission.

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