New data released by the Australian Banking Association (ABA) has shown a drop in demand for hardship assistance after a peak in early August, as Australia emerges from lockdowns and border restrictions across the country.
The data shows that almost 69,000 customers have received hardship assistance since 8 July this year, including more than 27,000 home loan deferrals and more than 4,000 business loan deferrals.
Comparatively, this is just 12,000 more hardship assistance approvals since last month, the smallest increase since the banking industry announced a second COVID-19 package of assistance in July this year.
The ABA has also released a new Financial Difficulty Guideline.
A key part of the new guideline is the option of customers in financial difficulty using a savings buffer.
The buffer allows individuals on a payment plan to have their bank set aside a small amount of funds for 'unexpected expenses or emergency bills'. While at this stage the commitment is only for banks to consider a savings buffer, it is an important start.
Key elements of the Financial Difficulty Guideline include:
- for people who are unlikely to be unable to restore their financial position, a recognition that banks can still help, for example, through agreeing on an alternative arrangement, plan, or contract
- adapting practices in times of emergencies or disasters
- where a short-term solution will not help overcome the customer’s financial difficulty, but a longer-term solution may, the longer-term solution will be favoured.