Australian regulators are urging banks to keep supporting borrowers who are still struggling financially amid the COVID-19 pandemic.
The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have released guidelines to help lenders address issues of borrowers, particularly those under repayment holidays.
"Lenders must do all things necessary to ensure that the credit activities authorised by their licence are engaged in efficiently, honestly and fairly," ASIC said. "As such, we expect lenders to have processes in place that will allow for an orderly transition and importantly, deliver consumers appropriate and fair outcomes."
Under the guidelines, lenders should take reasonable steps to reach out to their clients prior to the expiration of their repayment deferrals.
"Lenders should try to contact the consumer using a range of communication channels. Lenders should be able to evidence that they have made reasonable efforts to contact consumers," said ASIC.
If borrowers are unable to resume repayments on their mortgage, the lender is expected to collect information about their clients and offer tailored assistance that "genuinely addresses the needs" of their clients.
"To help consumers make informed decisions, we think more can be done by lenders to provide consumers with personalised information or representative examples about how assistance arrangements may affect their repayments and the cost of their loan over the longer-term," ASIC said.
ASIC said they are closely working with APRA to ensure the alignment of their expectations of how lenders are handling loans impacted by COVID-19.
"ASIC continues to encourage all lenders to work closely with consumers affected by COVID-19 to develop solutions that not only provide relief but are sustainable and assist consumers over the longer term," it said.
Collections: Mortgage News
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