Consumer advocates have called on ANZ to reopen access to redraws for home borrowers currently deferring loan repayments under Covid-19 assistance packages.
As reported last week in Banking Day, ANZ borrowers on mortgage deferrals are blocked from using redraw facilities even though they might be many months or years ahead on their loan repayment schedules.
While the bank insists that it communicated the restriction to almost 95,000 borrowers before they were granted loan deferrals, consumer groups question whether the redraw changes were properly disclosed.
Fiona Guthrie, the chief executive of Financial Counselling Australia, said the bank should review the redraw restriction on a case-by-case basis, given that the financial circumstances of many borrowers had changed since they started deferring loan repayments.
“For ANZ customers, the key will have been to ensure that people requesting a payment deferral clearly understood that this would mean they could no longer access the option to redraw their funds,” she said.
“The problem is that people’s circumstances change.
“For example, they may have lost their job or are struggling to pay essential bills.
“We would encourage ANZ to find a way for these customers to access their redraw funds on a case by case basis.”
Gerard Brody, the chief executive of the Consumer Action Law Centre in Victoria, said the Banking Code of Practice required ANZ to notify borrowers on hardship support of changes to other banking services they receive.
“Deferring loan repayments is not necessarily the most suitable option for all borrowers and people may have taken a Covid-19 support package without understanding the implications,” he said.
“I think the lesson is that the mortgage repayment deferral program was not the best option for everyone.
“The questions that needs to be answered are whether people were clearly informed and whether the bank met its obligation to communicate the redraw changes effectively.”
Section 178 of the Banking Code requires banks such as ANZ to advise borrowers in writing if hardship support results in the cancellation of other banking services.
ANZ maintains that it communicated the redraw changes to customers either through phone conversations or emails to customers.
“Customers are proactively encouraged to access their redraw funds and then take up the assistance – this is either through phone conversations, or via email communications,” a bank spokesman said.
“In addition, ANZ writes to all home loan customers who have successfully applied for the COVID-19 assistance - these letters include information about redraw facilities.”
A special Covid-19 amendment to the Code that took effect on 1 July might shield the bank against complaints from customers wanting to access their redraw facilities.
The temporary amendment, which expires next March, appears to give banks a way of escaping compliance with the Code during the Covid-19 crisis.
“These extraordinary circumstances may affect our internal resources and capacity, and the types of problems confronting our customers,” the temporary amendment states.
“Consequently, the effects of COVID-19 may mean we are unable to fully comply with strict timing requirements for notices and communications under the Code.”
A research report published last week by national consumer advocate CHOICE ranked ANZ the worst of the major banks for delivering COVID-19 relief to customers.
CHOICE’s banking policy adviser Patrick Veyret said it was disappointing that ANZ had decided to cancel redraw access for borrowers.
“This is very disappointing, but sadly unsurprising behaviour from ANZ,” Veyret said. “It can be a sound financial decision for a borrower to make extra repayments on their mortgage, and then have access to redraw facilities if times get tough.
“For ANZ to switch off this redraw facility is unfair on their customers.”