Big banks lead in hardship support, Bendigo and Bankwest fall short

The nation’s banking majors have gotten better in helping customers during difficult times, but two lenders must lift their game.

At the bigger end of the Financial Counselling Australia’s rankings, the big banks have made strides in how they assist customers facing financial hardship.

Australia’s big banks have lifted their game in helping customers in hardship, but Commonwealth Bank’s subsidiary Bankwest, and Bendigo and Adelaide Bank are ranked among the worst regulated lenders when it comes to facilitating interactions with counsellors.

At the bigger end of the Financial Counselling Australia’s rankings, the big banks have made strides in how they assist customers facing financial hardship, earning the highest rating of around 7 from financial counsellors,

“It has been great to see the significant improvement (of the big banks) over the last decade since we began (the survey) Rank the Banks,” said FCA acting chief executive Peter Gartlan.

Out of the four majors, National Australia Bank ranked the lowest with a score of 6.7, despite recently adding resources to its customer support team. That compares with the highest scores of 7 for CBA and Westpac. ANZ ranked 6.9, down from 7.1 in 2019, according to a new biennial survey, published by Financial Counselling Australia on Monday.

“We are constantly learning from best practice and evolving our service because we want to help those customers who need us the most,” said NAB assist executive Stephanie Boag. “This year we’ve added an additional 120 people to our support team.”

Financial counsellors had noted the major banks had developed good hardship practices and had well-trained staff. They had also adopted better practices around supporting people affected by domestic and family violence, the FCA said.

However, support when it came to helping scam victims needed further improvement.

Financial counsellors rated the hardship practices of Bankwest 5.6 out of 10, and Bendigo’s even lower at 4.8, according to the survey.

The scores compared with a rating of 4.5 for Bankwest in 2019 – the largest positive jump since 2019 among the non-majors (the survey did not run in 2021) – and 4.1 in 2013, the inaugural year of the survey. Bendigo’s score on the other hand is down from 5.7 in 2019, but is slightly better than the 4.3 it was given in 2013. The average non-major bank ranking was 5.

The results come as the corporate regulator, the Australian Securities and Investments Commission, puts a big focus on how lenders are supporting customers as they battle higher interest rates and cost of living pressures.

ASIC earlier this year sued Westpac accusing it of breaking credit laws when it failed to respond to vulnerable customers’ financial hardship notices, adding to their distress over several years. And ASIC chair Joe Longo last month said people should expect more enforcement action.

“It is disappointing to see the non-major banks still lagging the major banks when it comes to support for people facing hardship and the failure of many of them to consistently accept third-party authorisations,” Mr Gartlan said.

Mr Gartlan said that the worst performers were Bendigo, Citibank – which sold its personal banking business to NAB IN 2021 – and Bankwest.

Creditors refusing third-party authorisations is a big obstacle for financial counsellors, preventing them from assisting their clients. However, banks and lenders are facing security risks, which have led to more friction being added to processes and transactions.

But Mr Gartlan said the findings suggested “the non-major banks are not investing enough resources into their hardship teams and that their customers are not receiving proper hardship support.”

“Some of the non-major banks are actually subsidiaries of the major banks. Where that is the case, the major bank needs to intervene to improve the hardship response of their subsidiary bank,” he added.

A spokesman for Bendigo said the bank continuously works with the FCA “to address its concerns and streamline processes related to third party authorisations while ensuring the safety and security of our customer’s data.”

“We will continue to support customers as and when they need us,” he said.

Bankwest said it worked closely with councillors to support customers and recognised the need to continue to improve its services. “We’re focused on strengthening our engagement with financial counsellors, including ongoing representation at financial counsellor conferences, ensuring we are listening closely to understand how we can work better,” a spokesman said.

Non-banking lenders continued their historical underperformance relative to banks, with an average score of just 5. The highest ratings among that group were a 5 out of 10 for Cash Converters and Wallet Wizard and a 4.9 for Liberty.

“As for the non-bank lenders, their performance continues to be abysmal. This is particularly worrying as we know these lenders target people who are financially fragile,” Mr Gartlan said.

“The non-bank lenders that caused the most problems for financial counsellors by rejecting their third-party authorisations were Cigno, Toyota Finance and Latitude.”