Lenders Failing Those In Hardship

Anyone who is experiencing hardship should first contact their bank/lender. However, what if your bank ignores your cry for help? The Australian Financial Complaints Authority (AFCA) have revealed that financial difficulty complaints increased 25% in 2023. This may not be much of a surprise given the current climate however, more than half of these complaints are due to the lender failing to respond.

Buy now, pay later (BNPL) providers and small lenders seemed to be the main culprit, which is not surprising. BNPL schemes prey on people who are struggling and put them further behind with a false sense of how much money they really have in their budget. We also see people get caught up in the emotion of an impulse buy with no way to make large fortnightly repayments. 

Whether a lender is heavily regulated, like home loans are, or they get away with predatory lending, like payday loans., they should still have hardship support as a top priority. It is not good enough to be ignoring those who are struggling. Arrangements should be made to accommodate customers to make sure they are able to still live after their debt repayments are made. Unfortunately even with all these regulations and processes in place, borrowers still have a lengthy and exhausting battle when going through the complaint process when lenders act unfairly or in this case, don’t act at all. The case for living debt free is really highlighted as something to work towards. Especially when we see the majority of these complaints generating from small, short term loans. The extra life admin, stress and sleepless nights quickly outweigh the ease and thrill of buying what we want instead of making choices based on affordability and careful consideration of other options. 

After 15 years in finance and seeing many, many different ideas and ways of managing money and building wealth, I firmly believe that avoiding debt wherever possible (the exception being a home loan as modest as possible) and clearing any debt you do take on is the best way to build long term wealth with less risk and anxiety. 

I’ll leave you with a wise proverb that is as relevant as it is ancient:

“The rich rules over the poor, and the borrower is slave of the lender.” 

Proverbs 22:7