Call us: 0800 347 257

Lender fails to recognise request for hardship help

When Hine lost her job, she contacted her lender for help. Hine said her lender was not interested in helping and did not give her any information about what she should do. About six months passed and Hine’s arrears increased until she was around $4,000 behind on her loan repayments and the lender issued a repossession warning notice.

Hine again asked the lender to help, and this time the lender gave her a hardship application form and referred her to a financial mentor. The financial mentor helped submit the hardship application but because Hine still did not have a job and the arrears were so large, the lender’s proposal was unaffordable. The lender repossessed and sold the car, leaving Hine with an $11,000 debt.

The financial mentor encouraged Hine to complain to the lender. When the lender did not respond within 20 working days, the financial mentor referred Hine’s complaint to FSCL.


Shortly after we received the complaint, but before we had started our investigation, the lender said they wanted to resolve the complaint directly with Hine. The lender offered to write off the residual debt of $11,000 and pay her $3,000 as compensation for the stress Hine had experienced.

Hine did not accept the settlement offer, saying that she had paid the lender about $18,000 for the car and had nothing to show for this money. In addition, Hine had experienced extreme stress when she was unable to find anywhere to live as a result of the adverse credit listing made by the lender. Hine said she wanted the lender to pay her $18,000, being the amount she had paid them over the life of the loan, write-off the residual loan balance, and remove any reference to the debt from her credit listing.


We discussed the lender’s settlement offer with Hine. We suggested that by offering to write off the residual debt and pay $3,000 as compensation, the lender was acknowledging that they may not have handled the original hardship application as well as they should have. It was difficult to know for certain what would have happened if Hine had submitted the hardship application as soon as she started missing payments, but we noted that Hine had only recently found work. It was possible that, even if the lender had offered hardship relief sooner, it might not have been enough for Hine to keep the car. The lender’s offer allowed Hine to walk away from the debt with $3,000 in her pocket.

Hine agreed that the lender’s offer was almost there and said that if the lender agreed to amend her credit listing, to show no record of the debt, she would accept the offer and withdraw her complaint.


The lender agreed to correct Hine’s credit listing, as well as writing off the $11,000 of residual debt and paying her $3,000. The complaint was resolved.

Insights for participants

Under the Responsible Lending Code lenders must make sure their staff are trained to recognise a hardship request and ensure borrowers have information to enable them to submit a hardship application as soon as possible after they begin struggling with their payments.