AC: Different banks took different approaches to rolling out these packages didn’t they? At ANZ, it was the customer’s decision to opt in. And then there was an actual conversation with the customers about each one?
MH: That's right. Not all banks did it the way we did. Some chose, particularly in the small business space, to opt their customers in and give them the deferral because they felt that was the right thing.
I don't think a deferral was the right thing for every customer because every customer is different. What we felt we needed to do was give the customer the option. And to make that decision, they actually needed to know the full range of options available to them.
So do they want to put the payments on hold? Do they want to move to an interest only facility potentially so that they just lower their repayments? We have a large number of our customers who are actually ahead on their repayments and so they can go into the system and just lower the repayments themselves.
Even as interest rates were coming down, many were still making the same repayments. So now they can choose to lower their repayments or keep them where they are. Over the years many have kept them where they were so now they’re ahead, they have a buffer.
We've got customers who had money in offset accounts. We've got customers who have paid down mortgages and were able to redraw on some of those facilities. So there's a whole range of options.
That was why we thought the best thing to do was to talk to the customer. And remember, we get back to that point before, it's a deferral, not a waiver. The interest capitalises and continues to be added to the balance. For a lot of customers, their preference would be to lower the repayments but continue to make inroads.
Every customer is different and having that conversation gives us the opportunity to at least satisfy ourselves customers thought it through and made a decision about what's best for them. It’s not just one blanket policy.
AC: It's not necessarily the case then that taking a six-month deferral is in everyone’s interest?
MH: It's not because, in reality, some people are going to have less income on the back of this crisis. We can see from our data the amount of money coming into our customer accounts, as a total population, in the form of salary and wages, has fallen by about 9 per cent overall. So, as a population, our customers are earning less.
Now, probably there's no one who is actually earning 9 per cent less. There'll be a lot of customers that have dropped to zero because they've lost employment or their businesses have closed. And there are lots of customers who have lost 20 to 30 per cent because they might have had their hours cut back. They've lost overtime or they've gone from five days a week to four days a week.
Every customer is different. There are lots of customers whose income is still at 100 per cent of what it was. And we've got lots of businesses that have actually boomed in this time. Bike stores have run out of stock. Bakers, butchers, have seen sales climb as people are cooking at home a lot more. We've seen the queues at supermarkets. A lot of business have done particularly well and are in much better shape - but probably still started out uncertain about what was going to happen.
But other customers have found it to be much harder than they anticipated. So, for each of these customers, we’ve got to make sure we work through their scenarios.
In some cases, it’s not the right thing to just run up debt in this time. On the retail front, we know, for some customers, the credit card they have with us hasn’t been used for more than two years, it’s possibly their third or fourth credit card.
But it is not wise, if you've lost your job, to start running up debt on a credit card that you've never used before. So we've written to those customers to say we don't think they should use that card and we should cancel the limits. It would be irresponsible to allow those customers to access debt that has not been part of their normal cash flow cycle. It would put them further into debt - on the hope that in six months’ time everything's okay.
We just don't know for every customer what it's going to be like in six months. Unfortunately for some, it won't be good in six months’ time. They won't have found work. Or their businesses won’t recover. We can't allow people to go further into debt and just kick the can down the road and potentially even make it worse.