How to meet financial hardship obligations in Australia

A customer tells a collections agent they can't make this month's repayment. They don't say "hardship." They don't complete a form.

For an Australian lender, this conversation may already matter under the National Credit Code. Section 72 allows a consumer to notify the credit provider, verbally or in writing, that they are or will be unable to meet their obligations under a credit contract.

Meeting financial hardship obligations in Australia starts with recognising that notice, tracking the response period, communicating the decision, and keeping a record of what happened. This article outlines those responsibilities and the operational controls that can support them.

This article provides general information only and isn’t legal advice. Always check with legal and compliance advisors to ensure your practices are in line with applicable standards.

What counts as a hardship notice

A hardship notice doesn't depend on a particular channel, phrase, or application form. ASIC says a customer may give notice verbally or in writing.

ASIC's review of hardship practices (Report 782) also found lenders should treat a customer's statement to collections staff that they can't meet their obligations as a hardship notice. The report focused on 10 large home lenders, but ASIC says its insights are relevant to hardship involving all types of credit.

This has practical consequences. A notice might arrive in a branch conversation, a collections call, an email, a letter, or a digital message. Teams need a consistent way to recognise it, record when it was received, and send it to the right process.

Consider what could go wrong. If an agent logs the call as a payment discussion, the account may continue through standard collections treatment while the response period is already running.

Track the response timeframe

The timeframe depends on what happens after the notice arrives. ASIC summarises it as follows.

ASIC also explains the 21-day period begins the day after the notice is received. If the lender needs further information, it has 21 days from receiving the notice to request it, and the information requested must be relevant to the assessment.

A single countdown in a collections system won't capture these paths. Teams need to know which date applies, why, and who's responsible for the next step.

Useful data points include:

• Date and channel of the hardship notice
• Date additional information was requested
• Date information was received, if applicable
• Applicable response deadline
• Decision date and communication date
• Case owner and escalation status

Communicate the decision

The decision process doesn't end with an internal assessment. ASIC says that when a credit provider doesn't agree to change the contract, it must tell the customer, explain the reasons, and provide AFCA contact details and information about the right to complain to AFCA.

If the lender agrees to change the contract, written notice requirements can depend on how long the change defers or reduces the debtor's obligations. ASIC states that where the period is greater than 90 days, the lender must give written notice of the changes no later than 30 days after the agreement. If the period doesn't exceed 90 days, no such notice is required under section 73(1A).

These distinctions are easy to blur in operational procedures. They should be reviewed by legal and compliance specialists and reflected in the lender's own policies and templates.

Build records to explain the outcome

A compliant response needs more than a completed task. A reviewer should be able to understand what the customer said, what the lender decided, and why.

Consider retaining records of:

• What the customer communicated, and when
• Information the lender requested and received
• Who assessed the request and who authorised the decision
• What was offered, agreed, or declined
• What the customer was told and when
• Any complaint or escalation that followed

These are proposed operational controls, not an exhaustive statement of what the law requires. Each lender should align them with its legal advice, regulatory obligations, and internal policies.

Connect the decision to account activity

Hardship decisions affect more than one team. Collections, servicing, customer support, complaints, and legal or compliance staff may each hold part of the picture.

The institution needs to know:

• Which team owns the case at each stage
• Which account activities require review while the notice is being assessed
• How an agreed change reaches the system that manages the account
• What happens when information is missing or an update fails
• How overdue or unresolved cases are escalated

Don't assume a single answer applies to every product or situation. If your process pauses, modifies, or continues specific collection activities after a notice, define the rule with legal review and document the reason.

Where technology can help

Software can support disciplined execution, but it doesn't replace the lender's responsibility to make lawful decisions and communicate them properly.

When assessing collections compliance technology, look for support for:

• Capturing hardship notices from different channels
• Routing cases to specialist teams
• Calculating and monitoring response dates
• Controlling who can approve or amend outcomes
• Retaining communications and decision records
• Reporting overdue or exceptional cases

Debt Manager's configurable workflows, decision management, and communication capabilities can be used to support these processes, depending on how your institution configures and integrates them.

Configured workflows can help teams record hardship notices, track response dates, route reviews, and retain decision records. The lender remains responsible for ensuring its processes and decisions meet applicable requirements.

Questions to test your current process

Use these questions to find gaps before they appear in a complaint or review:

1. Can every customer-facing team recognise a verbal hardship notice?
2. Is the notice date recorded consistently?
3. Can the team distinguish between the response paths that depend on information requests?
4. Who authorises the decision, and where is that recorded?
5. Do decline letters include the information ASIC says must be provided?
6. Can the lender show how the agreed outcome reached the account system?

Explore Debt Manager to discuss how your institution could support hardship workflows, case ownership, and operational oversight.