CBA, OpenPay slammed for hardship provisions

Survey rates CBA the worst of the big four banks in its response to hardship and OpenPay the worst in Australia.

Commonwealth Bank signage is seen in Sydney, Wednesday, August 8, 2018. Commonwealth Bank has posted a drop in annual cash profit of $9.23 billion, hit by a $700 million fine after the nation's biggest bank broke anti-money laundering laws. (AAP Image/Erik Anderson) NO ARCHIVING

Commonwealth Bank has slipped in the rankings to the last place among the big four banks for its hardship responses, according to a survey by the financial counselling industry.

At the same time buy now, pay later providers were rated worse than banks after they were included in financial hardship rankings for the first time.

State and territory financial counselling associations and the Financial Counselling Australia group on Friday released its biannual survey that ranks banks and other financial services providers for their responses for customers in financial hardship.

The survey had found in recent years that the big four banks had largely remained stable in their financial hardship provisions, but in the most recent report, CBA’s performance slid from 7.2 out of 10 in 2017 to 5.9.

The next lowest rated bank, Westpac, came in at 7, while NAB was the highest rated of the banks at 7.3. Under the FCA survey a higher ranking is a better performance.

A CBA spokesman said they had never been more committed to improving financial wellbeing for all Australians.

“Financial counsellors play an important role in helping many Australians through individual times of crises and we have been working closely with the FCA over the past few years to improve the services we offer our most vulnerable customers,” they said.

“We acknowledge and therefore greatly appreciate the feedback from the counsellors which will help us to address their concerns in areas where we need to do better. We are absolutely committed to doing the best thing to support our customers and the country through this challenging period.”

“Since the completion of the Rank the Banks survey six months ago, we have provided substantial assistance to customers in hardship including during bushfire recovery and coronavirus.

“We have also more than doubled the number of people in our Australian-based financial assistance team to provide better quality support to those who most need it.”

NAB group executive personal banking Rachel Slade said the bank had managed to top the rankings by working to improve its customer relations.

‘’We once had a debt collections team like every other bank. It wasn’t a good experience for our customer and it wasn’t about helping them through hardship. The whole reason we exist is to serve our customers, so we needed to change it to do exactly that,” she said.

“We worked with Kildonan Uniting Care four years ago to create NAB Assist, a team of caring individuals who work with customers to get through financial challenges and come out with a more positive future on the other side. Our team are about getting it right for our customers, showing empathy and helping them get back of their feet.”

The survey, undertaken in December and January before many banks acted in response to the coronavirus pandemic, took the temperature of 282 counsellors in every state and territory.

Financial Counselling Australia CEO Fiona Guthrie said although the survey captured the situation pre-COVID the results were still very concerning.

“Our unemployment rate is the highest it has been in a long time. Banks and other creditors must rise to the challenge and ensure that people in financial stress are looked after,” she said.

“People need to be treated with compassion and respect. They need to be given enough time to recover and offered affordable repayment options.

For the first time the survey also looked at buy-now-pay-later platforms, all of which rated 5 or below.

OpenPay was rated as the worst platform in the country for its financial hardship measures at 3.9.

Ms Guthrie said the results showed BNPL companies needed “to do a lot better for vulnerable customers”.

“The way a bank or other credit provider responds to a customer in financial hardship can be the difference between financial recovery and financial oblivion,” she said.

OpenPay CEO Michael Eidel said the business took the wellbeing of its customers very seriously.

“We acknowledge the shortcomings outlined in this report. As part of our commitment to continuous improvement across all areas of our business, we have recently made a substantial number of proactive process changes – both prior to, and during the COVID-19 period,” he said.