There has been an “alarming” rise in breaches of Part 9 of the Banking Code of Practice, which covers obligations to support customers facing financial difficulty. The Banking Code Compliance Committee released its latest compliance report this week, covering the six months to June. It said that breaches of Part 9 were up by 39 per cent. At the same time, the Australian Retail Credit Association reported that a significant proportion of Australians needing financial assistance were unaware of banks’ hardship arrangements. BCCC chair Ian Govey said this increase was “alarming” and that at a time when cost of living pressures were increasing “the imperative for banks to provide support to customers in financial difficulty cannot be overstated”. Breaches included failing to respond to financial hardship requests, persisting with debt collection activities despite hardship arrangements being in place and neglecting to follow through on agreed arrangements. Govey said: “Banks have had ample time to anticipate the surge in financial hardship requests and implement measures to manage them effectively. We expect the industry to prioritise improvements in staff training, systems and procedures to better support people in need during these challenging times.” He also said the BCCC suspected there was under-reporting of breaches. One of the Part 9 obligations is that when contacted by customers facing financial difficulty a bank must explore options and provide the customer with information about the ways the bank can help. The BCCC said common breaches of this obligation included failing to respond promptly and failing to deal with third-party representatives as requested by the customer. Another Part 9 obligation is that a bank must work with individual customers and consider their financial situation when offering support or referral to a financial counsellor. The most common breach of this obligation was failing to offer or provide financial hardship assistance despite receiving a notification or trigger that a customer may require support. Another obligation is to inform customers when reporting default activity to a credit reporting agency. The number of breaches of this obligation doubled over the reporting period. Under the code, banks are committed to clear guidelines for debt collection but there was an increase in breaches where they carried out debt collection when a hardship arrangement was in place, they sold debt while still considering a customer’s situation and they provided incorrect information about debt recovery. ARCA released the results of a survey which found that 21 per cent of Australians have been in a situation where they needed assistance with loan repayments but have not asked for help. An association spokesperson said people need to know more about hardship arrangements and they should be speaking to their lender if they are struggling. But the survey response indicates there is a significant lack of awareness.