Financial hardship, no evidence provided

The CCFA has rules for lenders about hardship applications and fees

Financial hardship, no evidence provided

About a year after Dan* took out a loan, he told the lender his accountant had stolen money from his bank account, which had left him in financial hardship. He asked the lender to extend the term of his loan.

The lender asked whether Dan’s bank would refund the money and said it could put Dan’s next repayment on hold. The lender noted Dan’s account was not in arrears at that stage and said it was unable to extend the term of the loan. Dan told the lender he wanted to make a financial hardship application, because he’d lost his job and had no income. The lender asked Dan to provide some proof he had lost his job and evidence to show the level of repayments he could afford. Dan provided no evidence and his hardship application was declined. ​Dan complained.

He said his hardship application shouldn’t have been declined, and the fees he’d been charged were unreasonable. ​He wanted a repayment holiday, or the loan to be extended until he got a job. He also wanted the lender to write-off the fees and pay him $4,000 for emotional harm.

​Under the CCCFA, a borrower must make a hardship application in writing and specify a reasonable cause for their inability to meet their obligations under the contract. The lender must treat the borrower reasonably and in an ethical manner. In this case, the IFSO Scheme found the lender had treated Dan in a reasonable manner, including the request for evidence of financial hardship.

The IFSO Scheme carefully considered the financial information provided and found the fees charged were not unreasonable, in accordance with the CCCFA.

Complaint not upheld.

*Names have been changed

See the full case study.