The situation has evolved significantly since Federal and State governments, regulators and banks came together last year to address the first series of lockdowns. And some important lessons have been learnt along the way that will help shape how we support customers through this latest leg of the pandemic.
“Every customer’s circumstances are different and a deferral may not be the best option for some of them.”
The first thing to say, to both home loan and business customers, is if you are experiencing any financial difficulties, come and talk to us. The sooner we start that conversation and get a full understanding of your financial situation, the quicker we can devise a strategy best suited to your needs.
This time around it’s not the “one-size-fits-all” deferrals banks provided to thousands of customers last year. There is now a whole range of options available, including accessing funds in offset accounts, temporarily reducing repayments or switching to interest-only payments for a period.
Small business customers can apply for a range of measures, including up to 60 days repayment deferral on business loans, waiving merchant terminal rental fees and fee-free access to funds held in business term deposits.
Every customer’s circumstances are different and a deferral may not be the best option for some of them. That’s because the money still has to be repaid so there could be implications for their credit status down the track.
Many customers who took a deferral last year came out of the initial lockdowns in pretty good shape. At that time, there was so much uncertainty it was wise for customers to take advantage of deferrals because none of us knew what was coming around the corner.
However this time, instead of the deferral option being like a cover-all insurance policy that everyone takes out, it will be an option customers take out only if they really need it - like an extra lever we can add to our existing financial hardship process.
While the average number of calls for assistance has risen in July compared with June, they are coming off a relatively low base and are still well below the peak we saw at the height of the pandemic in 2020. At ANZ we don’t expect the volumes to be anything like what we saw last year.
Perhaps not surprisingly about three quarters of applications for assistance from home loan customers recently have come from New South Wales, currently in the grip of an extended lockdown.
The majority of requests for assistance from small business customers in July have also come from New South Wales and many businesses have already taken advantage of reduced repayments or have temporarily switched to interest-only payments.
Ready to help
We always expected there would be greater demand on our hardship teams in the second half of this year after the initial government support programs tapered off. We increased resources to those teams, expecting worse outcomes than what transpired.
However, the size and scope of the government support surprised us, as did the rapid rebound in the economy we saw earlier in the year. It helped keep a lot of people in good shape.
We are well placed now and have the capacity to deal effectively with customers’ issues as they require it. We have the financial wherewithal to do it, we’ve got the people in place to do it and, most importantly, we have the will to do it.
While we’re not out of the woods yet, we are ready to work again with governments and regulators to make sure our customers not only survive this latest upheaval but emerge ready to take advantage of the rebound on the other side.
Mark Hand is Group Executive for Australian Retail and Commercial Banking at ANZ