1 00:00:05,820 --> 00:00:08,099 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:08,099 --> 00:00:13,019 Sean Aylmer: Aylmer. It's a pretty confronting statistic, almost 6 million Australians 3 00:00:13,020 --> 00:00:15,600 Sean Aylmer: have struggled to make debt repayments in the last 12 months 4 00:00:15,870 --> 00:00:18,928 Sean Aylmer: as the cost of living crisis hits home. Just as 5 00:00:18,930 --> 00:00:22,470 Sean Aylmer: alarming though is the fact that 30% of people haven't asked 6 00:00:22,470 --> 00:00:25,169 Sean Aylmer: for help from their bank or lender. In fact, they 7 00:00:25,170 --> 00:00:27,750 Sean Aylmer: wouldn't ask for help from their bank or lender. It's 8 00:00:27,750 --> 00:00:30,750 Sean Aylmer: prompted a major campaign from ASIC, the Australian Securities and 9 00:00:30,750 --> 00:00:33,388 Sean Aylmer: Investments Commission, to make sure that Australians who need help 10 00:00:33,750 --> 00:00:36,810 Sean Aylmer: know that it's available. Alan Kirkland is a commissioner at 11 00:00:36,869 --> 00:00:38,580 Sean Aylmer: ASIC. Alan, welcome to Fear and Greed. 12 00:00:38,909 --> 00:00:40,168 Alan Kirkland: Great to be here, Sean. 13 00:00:40,680 --> 00:00:42,989 Sean Aylmer: We know we're in a cost of living crisis, but 14 00:00:42,990 --> 00:00:46,619 Sean Aylmer: did the statistic surprise you that almost half of all 15 00:00:46,620 --> 00:00:49,620 Sean Aylmer: Australians with debt have struggled to make repayments? 16 00:00:50,250 --> 00:00:52,979 Alan Kirkland: I think that level of people who've experienced some sort 17 00:00:52,979 --> 00:00:56,159 Alan Kirkland: of financial hardship in the last 12 months did surprise us a bit. But 18 00:00:57,300 --> 00:00:59,130 Alan Kirkland: the way we ask the question is, really, " Have you 19 00:00:59,130 --> 00:01:01,650 Alan Kirkland: had any trouble making or have you been concerned about 20 00:01:01,650 --> 00:01:03,960 Alan Kirkland: making repayments anytime in the last 12 months?" So it 21 00:01:03,960 --> 00:01:06,360 Alan Kirkland: doesn't necessarily mean that all of those people missed a 22 00:01:06,360 --> 00:01:08,459 Alan Kirkland: repayment, but certainly a lot of people have been in 23 00:01:08,459 --> 00:01:11,639 Alan Kirkland: that situation where they have been worried about whether they're going to 24 00:01:11,639 --> 00:01:14,700 Alan Kirkland: make their repayments. And that is, as I guess you've acknowledged 25 00:01:14,700 --> 00:01:16,890 Alan Kirkland: in your intro, one of the key reasons that we 26 00:01:16,890 --> 00:01:20,220 Alan Kirkland: wanted to turn this into a campaign and go out 27 00:01:20,220 --> 00:01:22,799 Alan Kirkland: and really raise awareness of the basic options that are 28 00:01:22,800 --> 00:01:23,909 Alan Kirkland: available to people. 29 00:01:24,420 --> 00:01:26,069 Sean Aylmer: Do you get a sense, and maybe you have data 30 00:01:26,069 --> 00:01:27,780 Sean Aylmer: on it, but at least a sense, that it is 31 00:01:27,780 --> 00:01:30,000 Sean Aylmer: worse now than it has been for a while? 32 00:01:30,930 --> 00:01:35,250 Alan Kirkland: Well, in general, the levels of arrears are getting towards pre- 33 00:01:35,250 --> 00:01:38,190 Alan Kirkland: COVID levels. So, to put it in that context, they're 34 00:01:38,580 --> 00:01:42,090 Alan Kirkland: not at alarming levels. But what we are seeing is 35 00:01:42,090 --> 00:01:44,130 Alan Kirkland: signs of an increase in the number of people that are in 36 00:01:44,370 --> 00:01:47,340 Alan Kirkland: hardship and reaching out to their lender for assistance. So 37 00:01:47,699 --> 00:01:50,010 Alan Kirkland: ASIC put out another report a couple of weeks ago 38 00:01:50,010 --> 00:01:53,970 Alan Kirkland: where we looked at hardship assistance from mid- '22 through 39 00:01:53,970 --> 00:01:56,730 Alan Kirkland: to the end of '23, particularly looking at home lending. 40 00:01:57,150 --> 00:02:00,929 Alan Kirkland: And we found that in the final quarter of 2023 41 00:02:01,170 --> 00:02:04,650 Alan Kirkland: the number of hardship notices given to home lenders was 42 00:02:04,650 --> 00:02:08,040 Alan Kirkland: 54% higher than in the previous year. So there are 43 00:02:08,040 --> 00:02:10,320 Alan Kirkland: signs that the number of people reaching out for help 44 00:02:10,620 --> 00:02:13,470 Alan Kirkland: are actually increasing, even if the numbers of people in 45 00:02:13,470 --> 00:02:15,359 Alan Kirkland: arrears are not yet at alarming levels. 46 00:02:15,840 --> 00:02:17,669 Sean Aylmer: Okay. There are still a stack of people who said 47 00:02:17,669 --> 00:02:20,820 Sean Aylmer: they just wouldn't reach out and ask for help. Why 48 00:02:20,820 --> 00:02:21,270 Sean Aylmer: is that? 49 00:02:21,750 --> 00:02:24,270 Alan Kirkland: Well, a lot of people just don't realize that they 50 00:02:24,270 --> 00:02:26,970 Alan Kirkland: can. That was a key barrier. In fact, over half 51 00:02:26,970 --> 00:02:28,889 Alan Kirkland: of the people we surveyed didn't know that they could 52 00:02:28,889 --> 00:02:31,860 Alan Kirkland: go to their lender and ask for assistance. Then, for 53 00:02:31,860 --> 00:02:35,370 Alan Kirkland: people who perhaps were aware of that, if they felt 54 00:02:35,370 --> 00:02:38,129 Alan Kirkland: they needed some extra assistance in making that request, they 55 00:02:38,130 --> 00:02:40,589 Alan Kirkland: didn't know where to go. And then there are a 56 00:02:40,590 --> 00:02:44,940 Alan Kirkland: range of emotional barriers, stress and anxiety. Obviously if you're 57 00:02:44,940 --> 00:02:47,790 Alan Kirkland: in financial hardship, often it's due to other things that 58 00:02:47,790 --> 00:02:49,950 Alan Kirkland: are happening in your life. So people are already in 59 00:02:49,950 --> 00:02:52,830 Alan Kirkland: a heightened emotional state trying to juggle a number of 60 00:02:52,830 --> 00:02:56,039 Alan Kirkland: things. That can be a barrier. And then for some 61 00:02:56,040 --> 00:03:00,239 Alan Kirkland: people it's feelings of having failed, or shame, or embarrassment that 62 00:03:00,630 --> 00:03:03,840 Alan Kirkland: really hold them back from reaching out. And, I guess, 63 00:03:03,840 --> 00:03:06,720 Alan Kirkland: we're really trying through this work that we're doing now 64 00:03:06,720 --> 00:03:08,970 Alan Kirkland: to try and help people to get over those barriers 65 00:03:08,970 --> 00:03:10,289 Alan Kirkland: and just take the first step. 66 00:03:11,040 --> 00:03:14,579 Sean Aylmer: Because I'm sure for many, many people it's not something 67 00:03:14,580 --> 00:03:18,119 Sean Aylmer: they did. It's just life. It might be economic circumstances. 68 00:03:18,119 --> 00:03:19,650 Sean Aylmer: It might be losing a job. It might be interest 69 00:03:19,650 --> 00:03:24,570 Sean Aylmer: rates rising. It's not personal for many people, I'm sure, Alan. 70 00:03:25,110 --> 00:03:28,500 Alan Kirkland: That's a really important message to get out. Financial hardship 71 00:03:28,500 --> 00:03:31,288 Alan Kirkland: is something that can happen to anybody. It will sometimes 72 00:03:31,290 --> 00:03:35,100 Alan Kirkland: be to economic circumstances, and certainly cost of living pressures are 73 00:03:35,100 --> 00:03:37,920 Alan Kirkland: the biggest reason that people have cited in this research. 74 00:03:38,280 --> 00:03:40,980 Alan Kirkland: But it can also be unexpected events. It might be 75 00:03:40,980 --> 00:03:42,930 Alan Kirkland: a sudden illness, it means you've got a bunch of 76 00:03:42,930 --> 00:03:46,349 Alan Kirkland: medical expenses. It might be because you suffered a drop 77 00:03:46,349 --> 00:03:49,409 Alan Kirkland: in income, getting less hours at work, or you had 78 00:03:49,410 --> 00:03:52,049 Alan Kirkland: a casual job that you've lost. There are a whole 79 00:03:52,049 --> 00:03:54,900 Alan Kirkland: range of reasons that can mean that people suddenly find 80 00:03:54,900 --> 00:03:58,380 Alan Kirkland: themselves having difficulty making their commitments. And when we talk 81 00:03:58,380 --> 00:04:01,260 Alan Kirkland: to financial counselors working on the National Debt Helpline they 82 00:04:01,260 --> 00:04:05,370 Alan Kirkland: say that they are seeing people who might, for instance, 83 00:04:05,370 --> 00:04:08,339 Alan Kirkland: be people in double income families who have been fine 84 00:04:08,340 --> 00:04:12,089 Alan Kirkland: meeting their mortgage repayments until now, that then something happens 85 00:04:12,090 --> 00:04:13,230 Alan Kirkland: and suddenly they need help. 86 00:04:13,650 --> 00:04:15,420 Sean Aylmer: Stay with me, Alan, we'll be back in a minute. 87 00:04:22,529 --> 00:04:26,670 Sean Aylmer: My guest this morning is ASIC Commissioner Alan Kirkland. One 88 00:04:26,670 --> 00:04:29,070 Sean Aylmer: of the stats that, I mean, I really liked because 89 00:04:29,070 --> 00:04:31,020 Sean Aylmer: this is me through and through, is about 50% of 90 00:04:31,020 --> 00:04:34,320 Sean Aylmer: those who wouldn't seek hardship assistance avoid it because they're 91 00:04:34,320 --> 00:04:37,290 Sean Aylmer: worried it will cost them more in the long term. 92 00:04:37,500 --> 00:04:40,290 Sean Aylmer: And anytime I've... When we all go through times where 93 00:04:40,678 --> 00:04:43,499 Sean Aylmer: it is difficult to get your mortgage for the month, 94 00:04:44,160 --> 00:04:46,410 Sean Aylmer: I always worry though, if I don't pay it's going 95 00:04:46,410 --> 00:04:48,330 Sean Aylmer: to cost me more in the long term. Does it? 96 00:04:48,330 --> 00:04:50,010 Sean Aylmer: I suppose the interest, I mean, the longer it takes 97 00:04:50,010 --> 00:04:53,070 Sean Aylmer: you to pay back the more interest you pay, but 98 00:04:53,070 --> 00:04:54,539 Sean Aylmer: is that an issue for most people? 99 00:04:55,050 --> 00:04:58,948 Alan Kirkland: So it can result in higher costs, but it's a 100 00:04:58,950 --> 00:05:03,029 Alan Kirkland: relatively minor factor to consider in the context of financial 101 00:05:03,029 --> 00:05:05,879 Alan Kirkland: hardship. So if you're in a situation where what you 102 00:05:05,879 --> 00:05:09,240 Alan Kirkland: really need is to have your payments reduced for, say, three months 103 00:05:09,240 --> 00:05:13,289 Alan Kirkland: while you sort things out, yes, in all likelihood, the 104 00:05:13,290 --> 00:05:15,928 Alan Kirkland: amounts by which the payments have been reduced in that 105 00:05:15,928 --> 00:05:18,300 Alan Kirkland: period still need to be repaid and you may end 106 00:05:18,300 --> 00:05:20,520 Alan Kirkland: up paying a bit more interest over the life of 107 00:05:20,520 --> 00:05:23,219 Alan Kirkland: the mortgage. But, in the scheme of things, that's much 108 00:05:23,219 --> 00:05:27,000 Alan Kirkland: better than ending up with arrears accruing and having to 109 00:05:27,300 --> 00:05:31,049 Alan Kirkland: unwind a much bigger financial mess. So we're really trying 110 00:05:31,050 --> 00:05:33,659 Alan Kirkland: to say to people, actually, the whole point of being 111 00:05:33,660 --> 00:05:35,370 Alan Kirkland: able to reach out to a lender and say, " I 112 00:05:35,370 --> 00:05:38,520 Alan Kirkland: need a bit of assistance to get me through some tough times," is 113 00:05:38,520 --> 00:05:41,579 Alan Kirkland: to actually put you in the driving seat so you're 114 00:05:41,580 --> 00:05:44,640 Alan Kirkland: able to stay in control of your financial situation. You're 115 00:05:44,640 --> 00:05:48,330 Alan Kirkland: ultimately able to meet your repayments and, ideally, able to 116 00:05:48,330 --> 00:05:50,670 Alan Kirkland: repay the whole loan and get on with your life. 117 00:05:51,059 --> 00:05:54,178 Alan Kirkland: So it's really important that people understand this is a 118 00:05:54,178 --> 00:05:56,010 Alan Kirkland: regime that's there to help people in trouble. 119 00:05:56,610 --> 00:05:59,400 Sean Aylmer: Okay. What about the flip side, the lenders? So it 120 00:05:59,400 --> 00:06:00,900 Sean Aylmer: might be a big bank, it might be one of 121 00:06:00,900 --> 00:06:03,570 Sean Aylmer: the smaller banks, it might be a non- bank. What are they obliged to 122 00:06:03,570 --> 00:06:05,580 Sean Aylmer: do for their customers? 123 00:06:07,140 --> 00:06:11,400 Alan Kirkland: Anybody who's lending to individuals has really clear obligations under 124 00:06:11,400 --> 00:06:14,428 Alan Kirkland: the National Credit Code. So, under the National Credit Code, 125 00:06:14,428 --> 00:06:17,729 Alan Kirkland: if a consumer who has a loan says to their lender, " 126 00:06:17,760 --> 00:06:21,570 Alan Kirkland: I'm worried that I may not be able to make my repayments," the lender is required 127 00:06:21,570 --> 00:06:25,080 Alan Kirkland: to consider that and consider whether to vary the credit 128 00:06:25,080 --> 00:06:27,839 Alan Kirkland: contract. And what that can mean in practice is reducing 129 00:06:27,839 --> 00:06:31,618 Alan Kirkland: repayments for a period of time, or even pausing them, 130 00:06:31,620 --> 00:06:34,138 Alan Kirkland: or perhaps reducing an interest rate. As I was saying 131 00:06:34,139 --> 00:06:36,719 Alan Kirkland: before, it's just giving someone a bit of help to 132 00:06:36,750 --> 00:06:39,779 Alan Kirkland: get through a difficult period. And the lenders are required 133 00:06:39,779 --> 00:06:42,390 Alan Kirkland: to consider that you've given them that notice and to 134 00:06:42,390 --> 00:06:45,420 Alan Kirkland: respond within 21 days. And if they don't, then they're in breach of 135 00:06:45,779 --> 00:06:49,320 Alan Kirkland: the National Credit Code. And, when we see really serious failures, 136 00:06:49,320 --> 00:06:52,049 Alan Kirkland: then ASIC has shown that we're willing to take enforcement 137 00:06:52,049 --> 00:06:55,170 Alan Kirkland: action which can include taking serious action in court. 138 00:06:56,130 --> 00:06:58,169 Sean Aylmer: So if a customer feels the lender hasn't done the 139 00:06:58,170 --> 00:07:00,180 Sean Aylmer: right thing, what's the first step for them? 140 00:07:00,960 --> 00:07:04,049 Alan Kirkland: Well, you've got also clear rights to complain. So if 141 00:07:04,050 --> 00:07:06,809 Alan Kirkland: you've told your lender that you're worried about making your 142 00:07:06,809 --> 00:07:09,299 Alan Kirkland: repayments, you're not happy with the response they've given to 143 00:07:09,299 --> 00:07:11,639 Alan Kirkland: you, then you can make a complaint to them and 144 00:07:11,639 --> 00:07:14,850 Alan Kirkland: they have to review that complaint through their internal function. And 145 00:07:14,850 --> 00:07:16,679 Alan Kirkland: then if you're not happy with that response, you can 146 00:07:16,680 --> 00:07:20,370 Alan Kirkland: go to the Australian Financial Complaints Authority which is an 147 00:07:20,370 --> 00:07:25,080 Alan Kirkland: independent ombudsman service that can make binding determinations that lenders 148 00:07:25,080 --> 00:07:28,260 Alan Kirkland: have to comply with. And we encourage people to use 149 00:07:28,260 --> 00:07:31,559 Alan Kirkland: those complaint rights if they're not happy. And then ASIC, 150 00:07:31,829 --> 00:07:34,410 Alan Kirkland: looking over the system, we watch what's happening with those 151 00:07:34,410 --> 00:07:39,809 Alan Kirkland: patterns of complaints and AFCA reports to us if they see particular problems 152 00:07:39,809 --> 00:07:42,869 Alan Kirkland: being repeated within a particular lender. And that's another, I 153 00:07:42,870 --> 00:07:45,870 Alan Kirkland: guess, source of information that feeds into our decisions around 154 00:07:45,870 --> 00:07:47,791 Alan Kirkland: where we might need to take enforcement action. 155 00:07:47,791 --> 00:07:52,710 Sean Aylmer: ASIC's been very busy, Alan, because, I mean, you're in 156 00:07:52,710 --> 00:07:54,330 Sean Aylmer: the news all the time. There was a report the 157 00:07:54,330 --> 00:07:57,389 Sean Aylmer: other day that we were talking about on the show. It showed 158 00:07:57,389 --> 00:08:00,180 Sean Aylmer: that some lenders have made it too difficult for people 159 00:08:00,240 --> 00:08:02,759 Sean Aylmer: to ask for help, with applicants giving up on the 160 00:08:02,759 --> 00:08:06,389 Sean Aylmer: process. Is this all part of the same, well, it's 161 00:08:06,389 --> 00:08:08,760 Sean Aylmer: the same genre, I suppose, but how does that fit 162 00:08:08,760 --> 00:08:10,170 Sean Aylmer: in with what we're talking about today? 163 00:08:10,680 --> 00:08:13,620 Alan Kirkland: It's all part of the same theme. The report we 164 00:08:13,620 --> 00:08:15,870 Alan Kirkland: released a few weeks ago was looking at the lenders' 165 00:08:15,870 --> 00:08:18,900 Alan Kirkland: responses, and we did indeed find a number of problems 166 00:08:18,900 --> 00:08:22,559 Alan Kirkland: with the ways in which lenders were responding when consumers 167 00:08:22,559 --> 00:08:25,710 Alan Kirkland: told them that they were in hardship. And we're watching very closely 168 00:08:25,710 --> 00:08:28,860 Alan Kirkland: to see how the lenders improve their practices. Now we've 169 00:08:28,860 --> 00:08:31,679 Alan Kirkland: delivered those findings. And then having done that piece of 170 00:08:31,680 --> 00:08:34,470 Alan Kirkland: work looking at how the lenders were handling this situation, 171 00:08:34,710 --> 00:08:37,679 Alan Kirkland: we're keen to understand the consumer side. So what do 172 00:08:37,830 --> 00:08:41,070 Alan Kirkland: people who borrow money know about this system? How do 173 00:08:41,070 --> 00:08:44,578 Alan Kirkland: they experience it? Are there barriers? Do they feel confident reaching 174 00:08:44,580 --> 00:08:46,679 Alan Kirkland: out for assistance? So this is really, I guess, the 175 00:08:46,679 --> 00:08:51,209 Alan Kirkland: other side of that picture. And we're really trying to 176 00:08:51,210 --> 00:08:54,900 Alan Kirkland: encourage more people, if they land in these situations, to 177 00:08:54,900 --> 00:08:57,509 Alan Kirkland: reach out to their lender. And, at the same time, we've 178 00:08:57,509 --> 00:08:59,279 Alan Kirkland: got pressure on lenders to make sure that people are 179 00:08:59,279 --> 00:09:00,840 Alan Kirkland: treated more fairly when that happens. 180 00:09:01,320 --> 00:09:03,088 Sean Aylmer: Alan, thank you for talking to Fear and Greed. 181 00:09:03,330 --> 00:09:03,930 Alan Kirkland: Thanks, Sean. 182 00:09:04,440 --> 00:09:07,470 Sean Aylmer: That was ASIC Commissioner, Alan Kirkland. This is the Fear 183 00:09:07,470 --> 00:09:09,570 Sean Aylmer: and Greed Daily Interview. Join us every morning for the 184 00:09:09,570 --> 00:09:12,270 Sean Aylmer: full episode of Fear and Greed, business news for people 185 00:09:12,270 --> 00:09:15,238 Sean Aylmer: who make their own decisions. I'm Sean Aylmer. Enjoy your day.