ASIC sues home loan manager over 'unlawful' hardship application handling

The Australian Securities and Investments Commission (ASIC) has filed legal proceedings against Resimac, which manages non-bank loans provided by Perpetual Trustees, for failing to provide appropriate care in responding to hardship applications.

Resimac is an alternative lender for residential mortgages and asset finance, managing loans issued by Perpetual.

ASIC believes thousands of vulnerable customers suffering financial distress were impacted by Resimac's 'one size fits all' approach to hardship applications between 1 January 2022 and 15 February 2024.

ASIC claims Resimac requested "extensive" standard information from vulnerable customers without considerations if the information provided was relevant or necessary in light of their individual circumstances and any information that had already been provided.

Subsequently when the standard information was not provided, Resimac "summarily rejected their hardship applications."

The conduct contravened the obligation of a credit licensee to act "efficiently, honestly and fairly", ASIC said.

ASIC deputy chair Sarah Court said the approach is "particularly unfair for customers", especially for those experiencing domestic violence, bereavement, and more.

"As ASIC's report on hardship last year showed, failures in the approach and time taken to assess hardship applications can cause significant consumer harm, with many customers withdrawing from the process," Court said.

"Lenders and managers of consumer loans must do more to support customers in difficult financial circumstances, and not put up barriers or apply a faceless, cookie-cutter approach.

"Not only does this approach fail to treat customers with respect but we contend it is unlawful and breaches the licensee's obligations."

In May 2024, ASIC published Report 782 Hardship, hard to get help: Findings and actions to support customers in financial hardship about how lenders should support their customers experiencing financial hardship.

Court added that many lenders have responded to ASIC's demand to improve practices and frameworks for assessing hardship applications, but it "comes as too little, too late".

In an ASX announcement, Resimac acknowledged the proceedings and admitted the handling of its process "could have been better"

"Since becoming aware of the issue, Resimac has enhanced its processes to give greater support to customers facing financial difficulties, in accordance with ASIC's recommendations in ASIC Report 782 of May 2024," Resimac said.

"Resimac is considering the matters raised by ASIC, has co-operated with ASIC's investigation and will continue its co-operation.

"Resimac acknowledges that its previous practices regarding hardship notices provided by customers could have been better and apologises that this has occurred."