Annie Guest: One indicator of how the economy is tracking can be seen in calls to the National Debt Helpline. It’s just had a month of a record number of calls, many from small business owners. And there’s concern shame and a lack of trust stops many indebted Australians asking their banks for help. Jon Daly reports.
Archive: Thank you for calling the Small Business Debt Helpline.
Jon Daly: Calls for help are rising. Last month, the Small Business Debt Helpline received nearly 500 of them, the highest in the helpline’s history. Domenique Meyrick is the Co-Chief Executive of Financial Counselling Australia.
Domenique Meyrick: We have had a 16% increase from April to May, but an over 55% increase from the same time last year. So that really tells a stark story.
Jon Daly: Almost 14,000 individuals called the National Debt Helpline last month, an 11% increase on the month prior. But it’s a minuscule amount, especially when ASIC research suggests more than 5 million Australians struggled to pay off debt in the last 12 months. A third of them are reluctant to pick up the phone to their lender. Domenique Meyrick.
Domenique Meyrick: It’s really interesting to see this kind of data backing up what financial counsellors are seeing all the time. That hesitance to seek hardship is really concerning.
Jon Daly: Fiona Guthrie is the Chief Executive of Way Forward, a free debt negotiation service funded by donations from lenders, such as the banks. She says some borrowers don’t know about the options and banks’ obligations to offer help, or they just feel ashamed and embarrassed.
Fiona Guthrie: I think it’s a huge problem because what it means is that situations get worse for people.
Jon Daly: Lenders, like banks, are legally obligated to offer help when a borrower flags hardship. That might be through changes to the loan length, switching to interest-only payments for a while, or payment deferrals. Domenique Meyrick says that process can often be harder than it needs to be though.
Domenique Meyrick: Financial counsellors often hear stories of people who have called up seeking hardship and have found the system difficult to navigate, or haven’t had timely responses, or haven’t had appropriate options, haven’t had options that are targeted to their specific circumstances, and are not affordable.
Jon Daly: ASIC has accused lenders of failing to meet legal obligations by making hardship assistance too difficult. The Australian Banking Association says banks help thousands of Australians in financial trouble every week. The association has also been running a Don’t Tough It Out On Your Own campaign, urging borrowers to get help. But Fiona Guthrie says the banks and other lenders need more scrutiny.
Fiona Guthrie: There’s a whole lot of people who are renting who don’t have a mortgage, who’ve got unsecured debts, who are dealing with the second tier lenders and getting a really poor hardship response and there’s not enough focus on them.
Jon Daly: ASIC says people who are not getting enough help can contact the Australian Financial Complaints Authority.
Annie Guest: Jon Daly reporting. And if you’re experiencing financial stress, you can call the National Debt Helpline on 1800 007 007.