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Hardship relief application declined

Hine runs a marae experience business, targeted at overseas tourists to give them a genuine introduction to Māori culture. In December 2019, Hine purchased a new luxury vehicle, to transport her guests to and from the marae, borrowing $140,000 from a lender.

In March 2020 the Covid-19 lockdown brought Hine’s business to a halt. She applied for government assistance, and this carried her through to November 2020, when Hine applied to her lender for hardship relief.

Hine’s lender deferred her monthly loan repayments of $2,500 until April 2021. In April 2021 Hine’s business was still struggling. Although she was now marketing to New Zealanders, the volume of business was very low. Hine again submitted her financial position to the lender and offered to pay $1,000 a month towards the loan. The lender accepted Hine’s proposal and agreed she could make the reduced payments of $1,000 a month until August 2021, when the payments would revert to $2,500.

In August 2021, when the second hardship relief period ended, New Zealand was again in a Covid-19 lockdown and Hine applied for further hardship relief. The lender again assessed Hine’s financial position, but this time declined the application for hardship relief. The lender explained that the hardship relief is intended to cover a short-term business disruption. Hine’s business’s financial position had not improved since November 2021. The lender explained that Hine’s debt was increasing, with interest and fees added to the loan balance, and that the vehicle securing the loan was depreciating in value. The lender was not convinced that hardship relief was in anyone’s best interests.

Hine did not agree and complained to FSCL.


Hine said that the government was signalling that, as soon as vaccination rates were high enough, New Zealand would open the borders to tourists again. Hine was watching the vaccination rates with interest noting, at the time she spoke to us, that Auckland had reached the 80% vaccination mark. Hine said she needed to keep the vehicle so that she would be ready to immediately recommence business. Hine was frustrated that she had kept her business afloat during extremely difficult times only to be let down by her lender at the last hurdle.

The lender was sympathetic to Hine’s position, but said in their view it was irresponsible to continue to lend and approve hardship applications when the future was so uncertain. While the New Zealand borders may reopen in the very near future, the lender needed to assess the application on the information available now. Hine’s financial position had not improved over a year. Hine’s debt was increasing, and the asset was depreciating. The lender said if Hine was able to provide some evidence to show an improvement in her financial position they would reconsider, but in the absence of this information they had no option but to decline the application.


When we spoke to Hine, she agreed that her financial position had not improved but was confident that business would return to normal in the very hear future. Hine expressed her frustration at the lender’s refusal to see that New Zealand’s border closure will soon end. Hine asked us to intervene and persuade her lender to approve a further period of hardship relief.

Under our rules, known as our terms of reference, we cannot investigate a complaint about the exercise of a lender’s commercial judgement. From what we could see, the lender had approached Hine’s financial hardship relief applications appropriately. The lender accepted the first application for deferred payments with very little challenge. The second application was also accepted, but on this occasion the lender required some payments from Hine. The lender needed to see an improvement in Hine’s financial position to offer further hardship relief on the third occasion.

We acknowledged that Hine’s financial situation might improve soon, but hardship relief is intended to help in the short term. This was Hine’s third application, indicating more long-term financial difficulty. The decision to decline this third application was a business decision made by the lender, within the exercise of their commercial judgement.


We advised Hine that, under our rules, we were unable to require the lender to extend the hardship relief for a third time. Hine accepted our view and said she would contact the lender about surrendering the vehicle for sale.

Insights for consumers and participants

Covid-19 is having a devastating effect on some businesses. This case is an excellent example of a lender doing the right thing and providing hardship relief for a short time to see whether the borrower is able to recover from the unexpected loss of income.

However, where there is no evidence of an improved financial position, it would be irresponsible of the lender to continue to accept deferred or reduced payments indefinitely. The borrower’s debt is increasing, with interest and fees, while the loan’s security is losing value. Delaying the payments for too long could leave the borrower in the position where their debt becomes unmanageable.

We encourage borrowers to talk to their lenders early, take advice from qualified professionals, and act quickly to limit increasing debt.