national rank the banks survey - financial counselling australia

The Banks

Financial counsellors in Australia rank the financial hardship policies of the ‘big four’ banks

… and some of the smaller banks

MAY 2013

RANK THE

Financial counselling associations involved in this report:

FCRCFinancial & Consumer Rights Council Inc.

Published by:

Financial Counselling Australia (FCA) Ground Floor, River Tower, 20 Pidgeon Close, West End, Queensland 4101 PO Box 3482, South Brisbane, Queensland 4101

Telephone: 07 3004 6911 Fax: 07 3004 6999 Email: [email protected]

Disclaimer

This report is based on a survey of financial counsellors. It does not represent the attitudes or opinions of other third parties, including funding bodies.

1 RANK THE BANKS | 2013

Contents

Acknowledgements 2

Foreword 3

Executive Summary 5

1 BACKGROUND 8

1.1 Survey Overview 8

1.2 Methodology 8

1.3 Reach and Respondent Profile 9

2 QUANTITATIVE RESULTS 11

2.1 Overall Rank 11

2.2 Best and Least Performing, Most Improved 12

2.3 Communication 13

2.4 Attitude 14

2.5 Client Outcomes 14

2.6 Other Lenders 17

3 QUALITATIVE RESULTS 20

3.1 Introduction 20

3.2 ANZ 21

3.3 CBA 21

3.4 NAB 22

3.5 Westpac 22

3.6 Big Four: Other Comments 23

3.7 Citibank and GE 24

3.8 Other Banks 25

4 CONCLUSION AND NEXT STEPS 28

5 APPENDIX 1 29


Acknowledgements

The National Rank the Bank survey 2013 is a joint project between the State and Territory financial counselling associations and the peak body for financial counsellors, Financial Counselling Australia. The State and Territory financial counselling organisations are:

◗◗ Financial Counsellors ACT◗◗ Financial Counsellors Association of New South Wales◗◗ Money Workers Association of the Northern Territory◗◗ Financial Counsellors Association of Queensland◗◗ South Australian Financial Counsellors’ Association◗◗ Financial Counselling Tasmania ◗◗ Financial and Consumer Rights Council Victoria

◗◗ Financial Counsellors Association of Western Australia

The national survey would not have been possible without the inaugural 2012 Victorian Rank the Bank report, produced by the Victorian peak body. We particularly acknowledge the input of the FCRC Banking Issues Working Party and Victorian financial counsellors.

Funding for this survey was provided by:

◗◗ Financial and Consumer Rights Council◗◗ Financial Counsellors Association of Western Australia

◗◗ Financial Counselling Australia

Most importantly, thank you to all of the financial counsellors who took the time to complete the 2013 Rank the Bank survey.


Foreword

“Financial counsellors assist consumers in financial difficulty.

They provide information, support and advocacy to help

consumers deal with their immediate financial situation and

minimise the risk of future financial problems. The majority of

financial counsellors work in community organisations. Their

services are free, confidential and independent.”

Just about anyone can find themselves in financial difficulty—you lose your job, you or someone close to you becomes ill, your relationship breaks down or, like many people living on government benefits, you simply don’t have enough money to live on. If tough times hit, you need the comfort of knowing that your bank will be there to help you through.

Every day financial counsellors assist hundreds of Australians in financial difficulty. We are therefore well placed to comment on how well the banks are assisting their customers experiencing financial hardship. This was the driver for the 2013 Rank the Banks survey—we wanted more rigorous data about bank performance in this area.

The focus of the survey is primarily on the ‘big four’ banks as these are by far the biggest providers of financial services to the community. However, financial counsellors also interact with some of the second tier banks, and in some States, this ‘local’ bank may in fact be quite a big player. For this reason, the survey also included a smaller number of questions about these banks.

The survey builds on an earlier piece of work, published in 2012, by the Victorian peak body for financial counsellors, the Financial and Consumer Rights Council. A number of the banks asked us to repeat the survey, but at a national level. They share our concern about ensuring that customers are provided with adequate hardship assistance and were also interested in getting a broader, national perspective.

While inevitably survey rankings highlight differences between banks, this is not an exercise in criticism for its own sake. As a sector, we work cooperatively with the banking industry and have an ongoing and constructive dialogue. We also acknowledge the industry’s genuine commitment to improving hardship policies and practices. For example, under the auspices of the Australian Bankers Association, the industry is soon to release a guideline on hardship that, if implemented, will lead to positive change.


However we also recognise that more can be done. Our role as advocates for consumers is to highlight both what is working and where there are areas for improvement. We are confident that the survey results will be a catalyst for further discussion with the banking industry as a whole, and with individual banks, about customer hardship. Subject to funding, we hope to repeat the survey in future years.

Carmel Franklin Chair, Financial Counselling Australia on behalf of the Chairs of the State and Territory financial counselling associations

Rachael Milfull, Financial Counsellors ACT Vicki Geraghty, Financial Counsellors Association of New South Wales Eric Neil, Money Workers Association of the Northern Territory Mark Phillips, Financial Counsellors Association of Queensland Anne Crouch, South Australian Financial Counsellors’ Association Bert Aperloo, Financial Counselling Tasmania Maria Turnbull, Financial and Consumer Rights Council John Talbert, Financial Counsellors Association of Western Australia


Executive Summary

The National Rank the Banks survey 2013 captured the experience of 249 financial counsellors from every State and Territory in Australia regarding how well the banks deal with customers in financial hardship. This represents an overall survey response rate of 27% of the sector. The focus was on the ‘big four’ banks—ANZ, CBA, NAB and Westpac—but the survey also included some questions on several second tier banks.

The ‘big four’

◗◗ Respondents were asked to provide an overall ranking for each bank, where one was the lowest ranking and 10 the highest. NAB was the leader overall with a score of 6.2. In order, the other banks were ranked: ANZ 5.9, Westpac 5.0 and CBA 4.4.

◗◗ However, the overall rankings mask a degree of variability. While financial counsellors as a majority rated NAB and ANZ as the best to deal with, there were still a sizeable number of people who reported the opposite experience. In other words, all of the banks sometimes do well and sometimes do not.

◗◗ The same rank order of NAB, ANZ, Westpac and then CBA was evident for all of the detailed questions: first and subsequent communication with financial counsellors; attitutes toward financial counsellors and clients; whether initial repayment arrangements were affordable and whether final outcomes were fair and reasonable.

◗◗ Consistency was an issue across the board. The survey asked whether customers in similar circumstances are provided with consistent outcomes ‘none of the time’, ‘some of the time’, ‘most of the time’ or ‘all of the time’. No bank achieved a 50% score or more when the answers for ‘most of the time’ or ‘all of the time’ were combined.

◗◗ Understanding of long-term hardship—where a customer is unable to pay a debt in the forseeable future —continues to be a cause of concern. Financial counsellors said that all banks had a ‘poor’ understanding (although the result for NAB was slightly better).

◗◗ If a financial counsellor is unable to negotiate a fair repayment arrangement on behalf of a client, they may escalate this to the Financial Ombudsman Service. This was a relatively uncommon pathway. Of all the banks, escalation was more likely for CBA.

◗◗ ANZ was rated as the most improved bank in terms of hardship policies and practices over the past six months.

Citibank and GE

◗◗ Citibank and GE were included in the survey as they are often part of the day-to-day casework of financial counsellors. Respondents were asked to compare them to the ‘big four’ banks in relation to assisting customers in hardship.

◗◗ Citibank did not fare well. It was seen as ‘much worse’ or ‘worse’ compared to the ‘big four’ banks by 64% of respondents in total. GE in contrast was seen as ‘about the same’ (33% of respondents) or ‘better’ (23% of respondents).

◗◗ The same pattern was evident in the overall ranking, using a scale of one to 10, where one was the lowest rating and 10 the highest. Citibank was rated at 3.5 and GE at 5.6.


Smaller banks

◗◗ An optional question allowed respondents to comment on the hardship policies and practices of some of the second tier banks operating in Australia. The banks rated in this question were: AMP Bank, Bank of Queensland, Bendigo and Adelaide Bank, Bankwest, HSBC, ING Direct, Macquarie, Members Equity Bank and Suncorp.

◗◗ Although it needs to be kept in mind that the numbers of financial counesllors rating a particular bank were much smaller than those commenting on the ‘big four’ , this does not necessarily detract from the validity of the results.

◗◗ In general, the ratings, again on a scale of one to 10, were very low. The lowest ranked bank in the ‘big four’ was the CBA with a score of 4.4. With the exception of Members Equity Bank (4.5) all of the other second tier banks were below this benchmark. Macquarie had the lowest ranking overall of 3.1.

◗◗ These results show that, compared with the ‘big four’ banks, these smaller banks are perceived to have a poorer understanding of customer hardship, do not understand or acknowledge the role of financial counsellors and have unclear pathways and processes for assisting customers seeking hardship assistance.

Conclusions

◗◗ There are differences between the ‘big four’ banks when it comes to assisting customers in hardship, with some banks, more responsive and effective than others.

◗◗ This is not to say however, that any one bank can rest on its laurels. It is clear from the ‘spread’ of responses to each question, as well as the qualitative comments, that there can be a lot of variability both within and between banks.

◗◗ The result that is of particular concern relates to the smaller banks, including Citibank. We are aware that Citibank has recently embarked on significant reforms to its hardship polices and practices and expect that these should be picked up in future surveys.

◗◗ The financial counselling sector however needs to engage more with some of the smaller banks, as the results are very disappointing. Given the dominance of the ‘big four’ the sector has tended to focus on them alone, but it is obviously now timely to reach more widely.

◗◗ Finally, we look forward to continuing to work with all of the banks, both big and small, around improving hardship responses.


◗◗

1 BACKGROUND

“Customers are experiencing financial hardship if they want to

pay their debts, but are unable to do so.”1.1 Survey Overview

Financial Counselling Australia and the State and Territory peak bodies for financial counselling regularly receive feedback from financial counsellors about the hardship practices of the banking industry. While this feedback assists in policy and advocacy, this survey provides a more comprehensive and rigorous analysis.

At December 2012, 16.59 million customers aged 14 years and over, chose banks as their main financial institution. By comparison, credit unions and building societies were the main financial institution for 1.3 million customers and 499,000 customers respectively.1 Of the Australian banks, the ‘big four’—ANZ, CBA, NAB and Westpac —provide the majority of financial services to customers.2

With the largest customer base, the ‘big four’ also service the largest proportion of banking customers in financial hardship and these banks were the focus of the survey. However the survey also included some questions about the second tier banks, to provide a more rounded picture.

All banks have policies and procedures in place to support customers experiencing financial hardship. Apart from making good business sense, banks have legal and moral obligations to work with their customers to overcome their financial difficulties.

1.2 Methodology

Data for the report was gathered via the Survey Monkey on-line survey platform (Appendix 1 includes the survey tool). The survey was only for members of State and Territory financial counselling associations. Data was collected during April and May 2013. The survey was a mix of multiple choice scaled responses and ranking style questions. Additional open-ended questions captured qualitative feedback.

Data analysis of this survey was a mix of statistical and thematic analysis. Not all questions were mandatory. The percentages in this report relate to the percentage of respondents that answered a specific question, not the percentage of total survey

1 Australian Bankers’ Association Inc. (ABA) (2013) ‘Customers and customer satisfaction - Data note, http://www.bankers.asn.au

2 Australian Prudential Regulation Authority (APRA) (2013) ‘Statistics - Monthly Banking Statistics March 2013 (issued 30 April

2013)’ http://www.apra.gov.au


respondents.

1.3 Reach and Respondent Profile

The survey was undertaken by 282 financial counsellors with 247 completed responses. There are 920 financial counsellors who are members of their State/Territory financial counselling association. The overall national survey response rate based on survey completion was therefore 27%.

The response rate for each State/Territory, as a percentage of their membership and absolute numbers, is shown in Figure 1 below.

Western Australia

38%(45 responses)

NorthernTerritory

25%(6 responses)

South Australia10%

(10 responses)

Queensland43%

(34 responses)

New South Wales18%(63) Australian

Capital Territory

64%(7 responses)

Victoria35%

(70 responses)

Tasmania52%

(12 responses)

Figure 1 Response Rate for each State/Territory: Percentage and Number

A slightly larger proportion of respondents were working mainly in metropolitan regions (56.5%) as opposed to regional/rural areas. About a third of respondents had worked in the sector for three years or less (35.6%), while the majority of respondents had been working as a financial counsellor for a number of years: 40.9% for four to nine years and 23.5% of respondents for 10 or more years.

Respondents were also asked how often they were in contact with the hardship teams at each of the ‘big four’ banks on behalf of a client. Respondents most recent contact with each of the four banks was typically within the last week or month (71.5% of respondents). Over the previous six months, on average, respondents had been in contact with each of the big four banks on behalf of a client on a weekly to monthly basis (70.5% of respondents). Survey data therefore generally reflects recent experiences.


2 QUANTITATIVE RESULTS

2.1 Overall Rank

Respondents were asked to provide an overall score out of ten for each of the ‘big four’ banks in terms of their hardship policies and practices (one being the lowest ranking and ten the highest ranking). Respondents were asked to consider all of their survey answers in relation to communication with the bank, attitudes and processes and customer outcomes when determining an overall score for each bank.

Figure 2 below shows the overall scores. NAB was the leader overall with a score of 6.2. ANZ was second with a score of 5.9, followed third by Westpac with a score of 5.0. CBA was rated the lowest among the ‘big four’ banks with a score of 4.4.

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CBA 4.4Westpac 5ANZ 5.9NAB 6.2

Figure 2 Overall Ranking of the ‘Big Four’ Banks (using a scale of 1 - 10, where 1 is the lowest

ranking)

Overall rankings mask some of the variabilty in responses. For example, while ANZ and NAB had the highest overall scores, some financial counsellors gave them quite low ratings. Conversely, other financial counsellors rated Westpac and CBA very highly. This variability is shown in the four graphs in Figure 3 following.


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ANZ

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60

Westpac

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NAB

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CBA

Figure 3 Overall 1 - 10 rankings by Bank

2.2 Best and Least Performing, Most Improved

Respondents were asked which of the banks were the best performer,3 the lowest performer4 and most improved5 in terms of customer hardship. This data is in Table 1.

Bank Best Performing

Least Performing Most Improved

ANZ 32% 9% 40%

CBA 14% 54% 19%

NAB 44% 11% 25%

Westpac 10% 26% 16%

Total 100% 100% 100%

Table 1 Best performing, least performing and most improved bank

3 211 people answered this question.




Not surprisingly, the rankings for best performing and least performing bank were the same as described above, with NAB overall seen as the best performing bank and CBA as the least performing bank. ANZ was rated as the bank which had most improved in terms of hardship policies and practices over the past six months by the largest number of respondents. However all of the other banks also had some financial counsellors who said that they had improved the most. It is worth noting however that a relatively large number of financial counsellors (nearly 100) were unable to answer this question saying that they were ‘unsure’.

2.3 Communication

Respondents were asked to assess their experience of the quality of communication with each of the ‘big four’ banks’ hardship teams in three ways: first contact; subsequent contact; and the acceptance of third party authority forms. These aspects reflect the typical communication a financial counsellor has with a bank, as opposed to bank and customer communications.

Respondents were asked to rate each bank either as ‘very poor’, ‘poor’, ‘acceptable’, ‘good’ or ‘very good’. The combined percentage results for ‘good’ and ‘very good’ are shown in Table 2 below. We also computed the weighted averages (also shown in the table below), by assigning a value of 1 to ‘very poor’ , 2 to ‘poor’ and so on. This is another way of analysing the data. A mark of 3 or more was equivalent to a pass mark of ‘acceptable’.

Bank First Contact Subsequent Contact Letter of Authority% ‘good’ or ‘very good’

Weighted Average

% ‘good’ or ‘very good’

Weighted Average


Weighted Average

ANZ 48% 3.4 50% 3.4 60% 3.8

CBA 26% 2.7 25% 2.6 54% 3.6

NAB 52% 3.6 51% 3.5 63% 3.9

Westpac 37% 3.2 37% 3.2 56% 3.6

Table 2 Percentage of respondents saying that the bank was ‘good’ or ‘very good’ when it came

to first contact, subsequent contact and acceptance of letters of authority to act.

First contact

In terms of first contact and the initial ease of getting through to the bank hardship department, NAB and ANZ had the highest ratings with 52% and 48% of respondents respectively rating them as ‘good’ to ‘very good’. CBA had the lowest rating and did not reach an ‘acceptable’ grade.

Subsequent contact

Following initial contact, respondents were asked to rate each of the ‘big four’ banks on the quality of their subsequent communication with bank hardship staff considering factors such as reliability of returned calls, responses within 21 days for hardship requests (as required by the National Credit Code) or if agreements are confirmed in writing. The spread of bank ratings on this topic was nearly identical to that of first contact.


Letters of authority

A letter of authority permits a financial counsellor to act on behalf of a customer when dealing with a creditor. Respondents were asked to rate each of the ‘big four’ banks in terms of their willingness to accept a financial counsellor authority to advocate on behalf of their client. Respondents were very equal in their scoring across all of the ‘big four’ banks with all banks rated as somewhere between ‘acceptable’ and ‘good’.

2.4 Attitude

Questions to respondents on attitude addressed the relationship between bank hardship teams, customers and financial counsellors. Respondents were again asked to rate each bank from ‘very poor’, ‘poor’, ‘acceptable’, ‘good’ or ‘very good’. Again, we also computed a weighted average. The results are shown in Table 3 below.

Bank Toward Client Toward Financial Counsellors% ‘good’ or ‘very

good’Weighted Average


Weighted Average

ANZ 47% 3.4 61% 3.8

CBA 24% 2.7 42% 3.2

NAB 46% 4.1 61% 3.9

Westpac 33% 3.0 51% 3.5

Table 3 Percentage of respondents saying that the bank was ‘good’ or ‘very good’ when it came

to attitudes toward clients and toward financial counsellors

Attitude toward client

Respondents were asked to rate each of the ‘big four’ banks in terms of their general attitude towards customers in hardship considering factors such as the empathy of the bank hardship team, if staff attitude was helpful or unhelpful and whether customers were listened to. Again the same pattern emerges, with NAB and ANZ being rated the most highly. The CBA result is cause for concern.

Attitude toward financial counsellors

Each of the ‘big four’ banks were then rated by respondents in terms of general attitude towards dealing with a financial counsellor. These results were much higher overall than in relation to attitudes toward clients.

2.5 Client Outcomes

Financial counsellors work to achieve fair outcomes for customers in financial hardship. For this reason, the survey focused heavily on customer outcomes capturing the experience of financial counsellors in several areas – repayment affordability, fair and appropriate final arrangements, long term hardship, customer self-advocacy, consistency of outcomes for customers and referral to external dispute resolution.


Initial affordability and final arrangements

Respondents were asked whether, on balance, initial repayment arrangements offered by the ‘big four’ banks were affordable and then in a follow up question, if the final hardship arrangements resulted in fair, reasonable and appropriate outcomes for customers. Response options were ‘never’, ‘sometimes’, ‘often’ or ‘always’.

Figure 4 below shows the combined percentages for ‘often’ and ‘always’ for both questions. Overall, ANZ, NAB and Westpac scored more highly than CBA.

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Fair, reasonable and appropriate outcomes

WestpacNABCBAANZ

Figure 4 Perentage of respondents saying that the initial repayment arrangements are ‘often’ or

‘always’ affordable and percentage of respondents saying that final arrangements are ‘often’ or

‘always’ fair, reasonalbe and appropriate

Consistency

The survey also assessed consistency: are customers in similar circumstances provided with consistent outcomes ‘none of the time’, ‘some of the time’, ‘most of the time’ or ‘all of the time’. Figure 5 shows the results for ‘most of the time’ and ‘all of the time’. No bank reached a total of 50% on this basis, indicating that lack of consistency is a real concern. In terms of comparisons between individual banks, CBA has the lowest rating.

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All of the time

Most of the time

WestpacNABCBAANZ

Figure 5 Are clients in similar circumstances provided with substantially consistent

arrangements - results for ‘most of the time’ and ‘all of the time’


Long term hardship

Long-term hardship was defined as those customers that are not able to get back on top of their financial situation in the near future. This question asked respondents to rate each of the ‘big four’ banks as to whether they have an adequate understanding of the impact of long-term hardship on customers. Response options were ‘poor’, ‘acceptable’, ‘good’ or ‘very good’.

Overall, as shown in Table 4, respondents rated the ‘big four’ banks as mainly having either a ‘poor’ or ‘acceptable’ understanding of the impact of long-term hardship.6 Far fewer financial counsellors said that the banks had a ‘good’ or ‘very good’ understanding.

Bank Poor understanding

Acceptable understanding

Good understanding

Very good understanding

ANZ 39% 31% 22% 8%

CBA 56% 27% 14% 3%

NAB 32% 32% 19% 17%

Westpac 49% 33% 14% 4%

Table 4 Bank understanding of long-term hardship (with highest response highlighted)

Self advocacy

Self-advocacy in the context of this report relates to a client in financial hardship and their ability to liaise directly with the bank to achieve positive outcomes for themselves. Respondents were asked if in general each of the ‘big four’ banks make the same hardship options available for self-advocating customers as the options available when a financial counsellor is involved. Response options were ‘never’, ‘not often’, ‘sometimes’, ‘mostly’ or ‘always’.

In interpreting the results, we note that about 40 people answered ‘not sure’, presumably because they had no comparative experience to draw on. The overall results for those that did answer the question are in Table 5 below. They show that the majority of financial counsellors believe that customers who self-advocate do ‘not often’ get the same outcomes.

Bank Never Not often Sometimes Mostly Always

ANZ 15% 42% 29% 12% 1%

CBA 24% 47% 23% 5% 0%

NAB 12% 34% 34% 19% 2%

Westpac 8% 44% 28% 9% 0%

Table 5 Bank understanding of long-term hardship (with highest response highlighted)

6 The ‘unsure’ responses are not shown. There were between 17 to 29 people who were ‘unsure’ in making this assessment.


Escalation to the Financial Ombudsman Service

The Financial Ombudsman Service (FOS) is an external dispute resolution scheme set up to provide free, fair and accessible services to consumers unable to resolve disputes with financial services providers. All ‘big four’ banks are members of FOS.

Respondents were asked what percentage of clients they had escalated in the past six months to FOS, because they were unable to negotiate an appropriate arrangement with the bank for their client. Possible responses to the question were ‘0% (none)’, ‘less than 10%’, ‘10% to 30%’ , ‘more than 30%’ of clients or ‘unsure’.

As Table 6 shows, escalation to FOS occurs in relatively few cases. The CBA had the most instances of escalation.

Bank None (0%) Less than 10%

10% to 30% More than 30%

Unsure

ANZ 63% 25% 5% 2% 5%

CBA 50% 27% 11% 6% 6%

NAB 69% 20% 4% 2% 5%

Westpac 58% 26% 6% 3% 7%

Table 6 What percentage of your bank hardship clients have you escalated to FOS in the last six

months, because you were unable to negotiate an appropriate arrangement for your client?

2.6 Other Lenders

Respondents were provided with an opportunity to also rate Citibank and GE, as well as several other banks. Citibank and GE were singled out as they are commonly part of the day-to-day casework of financial counsellors. In some States, the second-tier banks can have a strong local presence and it was important to also capture data about this segment of the banking industry. These banks were also included in the survey as ones that financial counsellors may interact with from time to time.

Citibank and GE

Respondents were asked to compare Citibank and GE to the big four banks in relation to assisting customers in hardship. Were they: ‘much worse than the big four’, ‘worse than the big four’, ‘about the same as the big four’, ‘better than the big four’ or ‘much better than the big four’?

As Table 7 shows, Citibank did not fare well. It was seen as ‘much worse’ or ‘worse’ by 64% of respondents in total. GE in contrast was seen as ‘about the same’ (33% of respondents) or ‘better’ (23% of respondents).

Financial Institution

Much worse

Worse About the same

Better Much better

Unsure

Citibank 37% 27% 21% 4% 1% 10%

GE 211% 16% 33% 23% 12% 5%

Table 7 Overall how do Citibank and GE compare to the big four banks in relation to assisting


customers in hardship?

The same pattern was evident in the overall ranking, using a scale of one to 10, where one was the lowest rating and 10 the highest. Citibank was rated at 3.5 and GE at 5.6.

Selected other banks

An optional question enabled respondents to comment on the hardship policies and practices of some of the second tier smaller banks operating in Australia. The banks rated in this question were: AMP Bank, Bank of Queensland, Bendigo and Adelaide Bank, Bankwest, HSBC, ING Direct, Macquarie, Members Equity Bank and Suncorp.

Respondents were asked to provide a rating for a bank only if they had interacted with them in the past six months. Again, the question used the rating scale of one to 10, where one was the lowest rating and 10 the highest rating. The ratings for each bank are shown in Table 8 below, together with the number of respondents who completed the rating (as expected, there were smaller numbers of respondents for some banks).

Bank Rating Sample size

AMP Bank 3.7 23

Bank of Queensland 3.9 61

Bendigo and Adelaide Bank 4.3 85

Bankwest 4.1 113

HSBC 4.0 117

ING Direct 3.6 32

Macquarie 3.1 63

Members Equity Bank 4.5 40

Suncorp 3.9 71

Table 8 Ratings for second-tier banks re hardship policies

In general, these ratings are all very low. The lowest ranked bank in the ‘big four’ was the CBA with 4.4. With the exception of Members Equity Bank (4.5) all of the other banks are below this benchmark. Macquarie had the lowest ranking overall.

Although it needs to be kept in mind that the numbers of financial counesllors rating a particular bank were much smaller than those commenting on the ‘big four’ , this does not necessarily detract from the validity of the results.


3 QUALITATIVE RESULTS

3.1 Introduction

Optional open-ended questions were included in the survey to capture qualitative feedback. Qualitative comments flesh out the raw numbers, providing insights that would otherwise be lost.

As noted in Section 2, although there was a consistent rank order in terms of performance for the ‘big four’, the numbers alone mask some of the variability. While on aggregate, ANZ and NAB had higher rankings than Westpac and CBA this was not the experience of everyone. Qualitative data therefore helps explore some of this variability.

For this reason, rather than just pick out say the ‘good’ comments for the highest performing bank (or conversely the ‘critical’ comments for the lowest ranked bank), this section includes comments describing the range of experience. The comments for each bank are based on the questions in the survey regarding: ‘best peformer and why’, ‘lowest perfomer and why’ and ‘most improved and how’ and are illustrative of the broad themes overall in the responses. We will separately provide a complete set of the qualitative feedback to each bank.

Table 9 below sets out the open-ended questions and the number of people who responded to each question. As the table shows, there was a wealth of data, as many of the survey respondents took the time to provide qualitative feedback.

Qualitative question No of responses

Which of the ‘big four’ banks do you think is the best performer in terms of customer hardship and why?

154

Which the ‘big four’ banks do you feel is the lowest performer in terms ofcustomer hardship and why?

138

Which of the ‘big four’ banks has most improved their hardship policies and practices in the past six months and how have they improved?

79

Any further comments on any of the ‘big four’ banks in regard to commu-nication, processes or client outcomes?

110

Any comments about Citibank and GE hardship policies and practices? 89

Comment on some of the smaller banks and their hardship policies and practices: AMP Bank, Bank of Queensland, Bendigo and Adelaide Bank, Bankwest, HSBC, ING Direct, Macquarie, Members Equity Bank, Suncorp

38

Table 9 Qualitative questions and the number of responses


3.2 ANZ

Best performer and why Returns calls promptly, deals with

matter most seriously, does not delay decision-making, and quickest to resolve, very few if any issues go to FOS.

They seem to listen to both the client and financial counsellor and don’t expect extra irrelevant information.

After sending paperwork, you are able to negotiate for a good outcome for your client with the staff member in one phone call saving time and energy.

Lowest performer and why

Many of my clients have English as a second language. ANZ overall have been unwilling to work with our financial counsellors to ensure that client needs are being met as they have difficulties being identified using the telephone system.

The employees seem to have a checklist in their mind and the client/ FC needs to fit within the list.

Won’t enter long-term arrangements and offer no alternative.

Most improved and how

While it is still a hard process to achieve hardship with the ANZ, the way that the staff communicate with clients have improved.

ANZ appear to have become more flexible over the years and listen to previous suggestions by FCs.

ANZ were great, then their performance went down. They are now improving again which is great.

3.3 CBA

Many of my clients have English as a second language. CBA have been the most willing to work with clients and financial counsellors to ensure they are identified so that initial negotiations can happen.

Best performer and why

They do look at all of the issues and reasons to why the client is in hardship.

At this time CBA are the only banks that will work with our clients.


CBA also comment on what or where customers are spending or have withdrawn money. This is a regional area and sometimes ATMs are only in venues or the next one 30 km away. This type of judgemental behaviour is not helpful to a distressed client.

Difficulties with contacting the hardship department, unrealistic payments requested. Questions relating to the hardship already provided in the hardship application. Time consuming contacts

I find they are inconsistent, don’t contact me after initial hardship application, lose the application. Generally, only offer 3 months hardship and no longer term solutions or assistance for the client.



I feel that CBA have responded to our sector and developed good processes.

CBA now have one case manager dealing with client hardship and we are not having to repeat the story over and over.

CBA used to take forever to make a decision and/or communicate, have improved.

3.4 NAB


NAB will offer other alternatives that may suit clients’ circumstances better and explain why.

NAB is by far the most pleasant to speak to us. They are willing to negotiate, and regardless of whether they get what they want or not, their attitude is friendly and respectful.

The NAB have a solid and consistent FC liaison team. They know us and how we work. When making contact I have already worked over cases with the hardship team and they respect my input for the best outcome.


We found out at the Moneycare conference that NAB were going to stop the fix they put on short-term arrangements of interest, fees and charges. I cannot see how it will help anyone to have the interest dropped on them at the end of the 3 month moratorium this will make their hardship worse, this is despicable.

Difficult to deal with just the one section/ department. Problems/delays encountered in having documents/authorities uploaded onto their system causing barriers to getting a timely resolution.

Debt waivers have not been granted for vulnerable and complex client.


Consistency and their ongoing improvement regarding financial hardship processes and dealing with financial counsellors.

3.5 Westpac


Based on the amount of time I spend on the phone, their response time is quicker, they do not lose the authority forms, they get back to you when they say they do.

Least docs requested and takes the word of the FC as valid.

Responsive and offering reasonable terms to deal with multiple issues for one client.



They don’t listen and are unable to make decisions quickly.

Clients need advocacy otherwise results are poor. Also when requesting documentation they are slow or provide incorrect information.

They are not willing to understand the clients’ situation and most clients try negotiating with them and are sent to a financial counsellor when they could have negotiated a hardship arrangement.


Not requiring extreme docs and accepting the word of a FC more readily.

Although they are the weakest they are also the most improved. Particularly in letting clients pay down debt with no interest or fees.

Now that they have a number for financial counsellors, it makes it easier for us to get a resolution with this bank. .

3.6 Big Four: Other Comments

In addition to comments on specific bank performance, respondents provided general comments on hardship policies and practices across the ‘big four’ banks. Common themes included lack of self-advocacy opportunities for customers, poor offerings in terms of long-term hardship solutions for customers and inconsistency both within bank hardship departments and between the banks.

On the positive side, response time to hardship requests from financial counsellors was consistently seen as having improved across all of the ‘big four’ banks

Self advocacy

I find difficulties when the client tries to get information or address an issue, customers are being told they will only speak to the financial counsellor.

I have always found the ANZ, NAB and Westpac approachable and understanding of client needs, I have always gained a suitable outcome However; most banks do not seem to offer this to the customers direct. It is unfortunate that customers need to be represented by a financial counsellor to negotiate on their behalf to gain a mutual agreement (I had no dealings with CBA)

Customers often complain that the banks will not negotiate with them. Some customers have complained about inappropriate comments made by staff at the banks. I should add that most of the time they spoke to the collections team and not the hardship team.


Long-term hardship

Set procedures for long term hardship required.

All four banks: If Centrelink are happy that someone qualifies for a disability support pension that should also be good enough for the banks. Trying to get customers to organise medical documents that the banks view as acceptable is just adding to customers stress levels.

Callers constantly advise us that banks [are] not prepared to give an extension of hardship once the initial hardship variation granted for 3 months has expired, or decline request for hardship variation outright if the bank has already granted a hardship variation in the last year or two

Consistency

In general I would like to see a more straight forward request process, assessment and positive outcome consistent with the 4 banks.

If hardship policies, contact details, information required to process a variation application change need to notify FCA immediately… (presumably so that FCA can advise the sector more broadly)

Every dealing with these banks is different. Unfortunately it depends on the person you deal with. None of them seem willing to offer a short term moratorium whilst we initially work with client to assess position.

3.7 Citibank and GE

Comments on Citibank were generally more negative than comments about GE.

Citibank do not understand what hardship is. I think they work to a script and are unable to cope with anything that isn’t on their script. GE are one of the easiest creditors to deal with, and if the client’s situation required hardship assistance, they usually get it.

Citibank have good intentions, almost never deliver. GE big improvement, pragmatic will agree to waivers.

GE have been the best for 7 or 8 years. Citibank were the worst but haven’t contacted them for 5 months.

Common themes from respondent comments regarding Citibank, included lack of staff knowledge on issues of hardship, poor communication and un-collaborative attitudes towards working with financial counsellors. Common themes among comments on GE were improvements in process and attitude of hardship staff as well as concerns over the impacts of GE lending on customers.

Citibank do not listen, constant calls to repeat the same information when they have being informed client has no capacity and receives Centrelink income, Citibank forces many customers into stress and anxiety.

GE has [staff member name removed], what more can I say she accepts an honest discussion about client’s capacity and understands the ridiculous lending practices undertaken at point of sale transactions in stores.


GE have improved a lot over the last couple of years and they seem to sort things out with customers so we don’t see too many GE problems. On the other hand we have several problems still with our local Harvey Norman giving excessive GE credit to people on long term Centrelink benefits which then causes hardship as they could never afford the repayments.

Citibank spend the bulk of their time hiding their hardship team and failing to answer correspondence even when issues are escalated to “specialised” hardship staff. Client have no hope in self-advocating as the generic staff have received no training and have no capacity to undertake complex negotiations based on client provided information.

3.8 Other Banks

Respondents were also given the opportunity to comment on some of the smaller banks and their hardship policies and practices. The banks were AMP Bank, Bank of Queensland, Bendigo and Adelaide Bank, Bankwest, HSBC, ING Direct, Macquarie, Members Equity Bank and Suncorp.

General comments from respondents on these selected smaller banks compared with the ‘big four’ banks highlighted that when there was an issue of customer hardship, respondents preferred to deal with the ‘big four’ banks over the selected smaller banks.

I prefer to work with the 4 banks than to work with the others no matter how bad they are.

I think the BIG4 are much better than Bank of Melb, HSBC and Citibank.

Some of these banks just don’t care.

Overall the smaller banks don’t seem to have much idea of what a financial counsellor is, what they do, or how it can benefit to them long term. They won’t

accept authorities, hard to find out financial hardship team/arrangements.

Some selected comments on specific banks are below:

Bank of Queensland

Bank of Queensland is difficult to get an authority..difficult to work with after and if you can. They do not seem to recognise financial counsellors or budgets from us.

Bank of Queensland wouldn’t even accept my authority.

Bankwest

Bankwest only offer short term hardship. On some occasions Bankwest have sold the debt and haven’t spoken with financial counsellor (even though) .. a request for hardship was sent.

Bank West is difficult and sometimes rude.


Had a number of issues with Bankwest, client’s not being adequately assisted through initial hardship, which has then led to further hardship. Also the bank has made initial promises on an arrangement and then reneged on the arrangement over the phone, very unprofessional, and this is workers within upper management. Difficult to contact, have complained to FOS almost every time I have dealt with them at this level. Initial hardship is impossible to get resolution.

Bankwest needs to return calls to financial counsellors - instead of sending letters saying the application has been declined due to insufficient information. A phone call asking for the information would be terrific.

Bendigo and Adelaide Bank

Bendigo doesn’t understand financial hardship. They have no meaningful policy.

Bendigo bank just doesn’t listen, co-operate or try to assist!

Bendigo Bank is hard to deal with full stop. Their mortgage help is aggressive and they are more worried about the cost to the bank of a FOS dispute then resolving anything.

HSBC

HSBC have the most difficult hardship department usually they will only provide 3 months only hardship and expect customers to resume full payment would like to see HSBC introduce long term hardship if client have long term difficulties

HSBC is where GE was 4 years ago, exhibiting distrust of customers in hardship and onerous hardship application process.

HSBC are excellent about getting back to me within a couple of days of hardship application. They have generally accepted a long term (life term) arrangement for those on Centrelink.

HSBC advised that it was their policy to ask a person if they were eligible to withdraw money from their superannuation account before they would consider a waiver on their credit card account! The person had no assets and on DSP with

chronic health problems. They said that this was standard policy!

Macquarie, AMP, ING

Macquarie bank sometimes comes across as threatening and unprofessional.

We had a dealing with Macquarie and they were into me like it was my card, rude and horrible it felt like they had lent their personal money directly to the client.

Macquarie threatened my customers and would not listen to them. They also sold the customers vehicle for far less than it was worth, after promising the client they would not do this, therefore only increasing the client’s financial hardship.


Macquarie Leasing, sticking to: we do not have to grant hardship on a lease.

AMP/ Macquarie ING are most difficult to contact and get some feedback or discussion happening. They hold FCs at arm’s length until the 11th hour and then demand additional documents. ING demand that documents are posted to them snail mail … I found that amazing for an internet bank.

Suncorp

Suncorp are very difficult to deal with—unable to answer basic questions and continue to harass customers.


4 CONCLUSION AND NEXT STEPS

All of the State and Territory associations, as well as Financial Counselling Australia, receive considerable and ongoing feedback from financial counsellors about how the banks are responding to customers in hardship. Building on a similar 2012 survey of Victorian financial counsellors, this is the first national survey however that captures these experiences as a whole. Its significance is that it moves from anecdote to evidence, providing a sounder and more robust snapshot about what is happening in the hardship teams of the banking sector.

A key finding is that there are significant differences between the ‘big four’ banks when it comes to assisting customers in hardship. Put simply, some banks are more responsive and effective than others. This is clearly of concern as the way a bank responds to customers in financial difficulty can make or break an individual’s or family’s path to financial recovery.

Although some of the ‘big four’ banks rated more highly than others across all attributes, no bank can rest on its laurels. While on aggregate these banks were seen as doing well, it is clear from the ‘spread’ of responses to each question, as well as the qualitative comments, that there is a lot of variability both within, and between, banks.

It is also worth noting that the ‘rank order’ for the ‘big four’ banks of NAB, ANZ, Westpac and CBA was exactly the same for this 2013 national survey as it was for the 2012 Victorian-only survey of financial counsellors. The two surveys were around 18 months apart and while we know the banks have continued to focus on their hardship responses during this time, it is clear more needs to be done.

The result that is of particular concern relates to the smaller banks, including Citibank. We are aware however that Citibank has recently embarked on significant reforms to its hardship polices and practices and expect that these should be picked up in any future surveys.

The financial counselling sector needs to engage more with some of the smaller banks, as these results were very disappointing. Given the dominance of the ‘big four’ the sector has tended to focus on them alone, but it is obviously now timely to proactively contact and engage with these banks as well.

Given limited resources, financial counsellors can only assist a relatively small section of the population. However in many ways, financial counsellors are ‘barometers’ of what may be happening more broadly for the hardship customers of a given bank. For this reason, we look forward to using the results of this survey in continuing to work with all of the banks, both big and small, around improving hardship responses. This will assist not only the clients of financial counsellors, but all bank customers who may be doing it tough.


5 APPENDIX 1 - SURVEY INSTRUMENT

The survey tool

Which of the ‘big four’ banks – ANZ, CBA, NAB and Westpac – are the industry leaders in terms of supporting customers in hardship, who is the most improved and who is lagging behind? Based on your casework experience, the survey asks about your experiences in dealing with the banks in terms of communication, processes and client outcomes. There are also a couple of questions about some of the other, smaller banks.

The survey takes about 20 minutes to complete and is anonymous.

The survey is coordinated by Financial Counselling Australia in partnership with the state and territory financial counselling associations. The survey builds on the success of the FCRC Rank the Bank Survey 2012 which assessed Victorian financial counsellor experience of the hardship policies of Australia’s ‘big four’ banks. FCA and the state and territory financial counselling agencies will use the findings from this survey as a basis for discussion with the banks about improving hardship approaches.

For queries or assistance completing this survey, please contact FCA on (07) 3004 6911 or via email: [email protected]

Rank the Bank National Survey 2013Rank the Bank National Survey 2013Rank the Bank National Survey 2013Rank the Bank National Survey 2013

1. When did you last contact each of the big four banks on behalf of a client?

2. During the past 6 months, on average, how often have you contacted each of the big four banks on behalf of a client?

Frequency of Contact

*Within the last

weekWithin the last

monthBetween 1 to 3 months ago

Between 3 to 6 months ago

6 months agoMore than six months ago

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*

Every day Weekly Fortnightly MonthlyEvery couple of

monthsNot in the past 6

months






The following questions focus on communication with each of the big four banks’ hardship teams.

1. First Contact

Please rank each of the big four banks on the initial ease of getting through to the hardship department.

2. Quality of Subsequent Contact

Following initial contact, please rate each of the big four banks on the quality of their subsequent communication.

You might like to consider factors such as reliability of returned calls, responses within 21 days for hardship requests (as required by the National Credit Code) or if agreements are confirmed in writing.

3. Letters of Authority

Please rate each of the big four banks in terms of their willingness to accept your authority as a financial counsellor to advocate on behalf of your client.

Think of length of time it takes or ease with which each bank processes a letter of authority.

Communication

*

Very poor Poor Acceptable Good Very good Not sure





*






*







The following questions address issues surrounding the relationship between bank hardship teams, clients and financial counsellors.

1. Attitude toward Client

Please rate each of the big four banks in terms of their general attitude towards clients in hardship.

You might like to consider factors such as the empathy of the hardship team, if their attitude is helpful or unhelpful and whether clients are listened to.

2. Attitude toward Financial Counsellors

Please rate each of the big four banks in terms of their general attitude towards you as a financial counsellor.

Process and Attitude

*






*







The following questions focus on outcomes for clients.

1. Affordability

On balance, are the initial repayment arrangements offered by the big four banks affordable?

2. Fair, Reasonable and Appropriate Outcomes

On balance, do the final hardship arrangements offered by the big four banks result in fair, reasonable and appropriate outcomes for clients?

3. Long Term Hardship

For this question, we define clients in long term hardship as those that are not going to be able to get back on top of their financial situation in the foreseeable future.

Please rate each of the big four banks as to whether they have an adequate understanding of the impact of longterm hardship on clients.

Client Outcomes

*

Never Sometimes Often Always Not Sure

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*

Never Sometimes Often Always Not sure





*

Poor Acceptable Good Very good Not sure





Rank the Bank National Survey 2013Rank the Bank National Survey 2013Rank the Bank National Survey 2013Rank the Bank National Survey 20134. Consistency

How confident are you that clients in similar circumstances are provided with substantially consistent arrangements?

5. Escalation to FOS

What percentage of your bank hardship clients have you escalated to FOS in the last six months, because you were unable to negotiate an appropriate arrangement for your client?

6. Selfadvocacy

In general, do each of the big four banks make the same hardship options available for selfadvocating customers as the options available for clients when a financial counsellor is involved?

*

None of the time Some of the time Most of the time All of the time Not sure





*

None (0%) Less than 10% 10%30% More than 30% Not sure





*

Never Not often Sometimes Mostly Always Not sure






1. Overall Rank

In light of your previous answers, please rank each of the big four banks out of 10 in terms of their hardship policies and practices.

1 being the lowest ranking and 10 being the highest ranking.

2. Best Performing Bank

Which of the big four banks do you think is the best performer in terms of customer hardship and why?

3. Worst Performing Bank

Which of the big four banks do you feel is the lowest performer in terms of customer hardship and why?

Overall Rating for the Big Four Banks

*

Lowest 1 2 3 4 5 6 7 8 9 Highest 10

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Best performing bank

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Lowest performing bank

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Optional: Please comment on why this bank is the best performer?

Optional: Please comment

Rank the Bank National Survey 2013Rank the Bank National Survey 2013Rank the Bank National Survey 2013Rank the Bank National Survey 20134. Improvements

Which of the big four banks has most improved their hardship policies and practices in the past 6 months and how have they improved?

5. Please make any further comments on any of the big four banks in regard to communication, processes or client outcomes. Please state which bank or banks you are commenting on.

Most improved

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Optional: Please comment on how this bank has improved?


We are also keen to hear about your experiences in dealing with some other lenders, including Citibank and GE. For the sake of completeness, there is also one question about other banks.

1. Overall, how do Citibank and GE compare to the big four banks in relation to assisting customers in hardship?

2. Please rank Citibank and GE out of 10 in terms of their hardship policies and practices.

1 being the lowest ranking and 10 being the highest ranking.

3. This is an optional question to give you an opportunity to also comment on some of the smaller banks and their hardship policies and practices. Only provide a rating for a bank if you have had some interaction with them in the past six months. Again use the rating scale of 1 10, where 1 is the lowest rating and 10 is the highest rating.

Other Lenders

*Much worse than the

big fourWorse than the big

fourAbout the same as

the big fourBetter than the big

fourMuch better than the

big fourNot sure

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*

Lowest 1 2 3 4 5 6 7 8 9 Highest 10

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Lowest 1 2 3 4 5 6 7 8 9 Highest 10

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Bendigo and Adelaide Bank

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Optional: Please provide any comments about Citibank and GE hardship policies and practices.

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Optional: comments

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1. How many years have you worked in financial counselling?

2. In which state or territory do you most work?

3. Do you most work in a metro or regional/rural area?

Thanks for taking time to Rank the Banks!

Press the DONE button below to submit your survey answers

About You

03 years

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ACT

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nmlkj NT

nmlkj QLD

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national rank the banks survey - financial counselling australia

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