Many over-committed on consumer debt

The write-off or settlement of consumer debts of bank customers in financial difficulty is a rare outcome, a solution used in only two per cent of cases, the report of an inquiry into assisting customers in financial difficulty conducted by the Banking Code Compliance Monitoring Committee discloses.

Postponed or deferred payments are the most common assistance measure, accounting for more than 40 per cent of all assistance, the report found.

A CCMC analysis of bank data found that 17.5 per cent of financial difficulty assistance applications "come from customers who are overcommitted."

 The report cited disquiet of consumer advocates that "low levels of financial literacy and irresponsible lending - the provision of financial products or services, typically credit cards, that are not affordable" - persisted as a contributor to financial difficulty.

Banks, however, grant the majority of assistance requests. Excluding a dip in 2013-14, the industry as a whole granted around seven in ten financial difficulty requests each year since 2011-12, the report shows.

However, is said "acceptance rates differ substantially between banks: one bank approves almost 90 per cent of requests, while two banks approve just over half of the requests received."