The Treasurer has announced a new agreement between the Australian Government and the four major banks, to assist borrowers who are experiencing financial difficulty as a result of the global recession.
The Principles place obligations on the four major banks to provide temporary relief to borrowers and to provide assistance options that take into consideration the needs of the borrower concerned.
The banks will work with borrowers to determine the most appropriate assistance option for each borrower. Options include:
- in relation to mortgages, postponing for up to 12 months the dates on which payments are due under the contract (with interest to be capitalised into the loan);
- extending the period of the contract and reducing the amount of each payment due under the contract;
- reducing the limit available to customers on credit contracts;
- short term reductions in interest rates, or repayments due under the contract;
- offering different banking arrangements that will better suit the customer's needs;
- temporary overdrafts on a one-off and temporary basis to suit short-term needs;
- providing interest-only repayment options on loans; and
- providing fee waivers.
These options will be made available in circumstances where the borrower will be able to meet the new repayment terms and will be able to meet their new contractual obligations in the long-run.
If a borrower believes their bank has not lived up to its obligations under the Principles, they should first raise this with their bank's central customer complaints area, and if not satisfied with the response, then contact the Financial Ombudsman Service.
