Lenders’ compliance with their hardship obligations will come under greater scrutiny next year after ASIC added it to its list of enforcement priorities. Banks and other lenders were praised for their proactive approach to dealing with hardship during the pandemic lockdown period but it has been a different story this year. In March, the Banking Code Compliance Committee reported that incidents involving delays in responding to hardship applications, failure to document and communicate outcomes, and ongoing collection activities when customers are in hardship arrangements were a cause for concern. In August, ASIC reported seeing evidence of growing financial distress and difficulties for consumers due to cost-of-living pressures. “In this context, it is critically important that lenders have appropriate arrangements to respond to and support consumers experiencing financial hardship,” it said. In September, ASIC commenced proceedings against Westpac for failing to respond to customers’ hardship notices within the time required by law. Westpac blames a technology error for the failure and said it contacted the affected customers and completed a remediation program after uncovering the problem.  ASIC said that in some customers were subject to debt collection activities while waiting for the bank to respond to their notices. And last month, the Australian Financial Complaints Authority released its latest Systemic Issues Insights Report, which showed banks topping the list of systemic issue investigations, including matters involving debt collection and hardship.  In a case involving debt collection, the firm was sending default and demand notices to customers who were complying with repayment arrangements. Many of the affected customers had hardship arrangements. When it investigated, the firm found its program for handling hardship payment arrangements had gaps. It also found there was insufficient monitoring. In a speech at the ASIC Annual Forum yesterday, ASIC deputy chair Sarah Court said: “Last year we identified the protection of vulnerable consumers as an enduring enforcement priority and this year we focused on predatory lending and high-cost credit. “For 2024 we are adding two new enforcement areas particularly relevant to vulnerable consumers. The first is the provision of used car finance and the second is financial hardship obligations.”