How Banks Can Help You Deal With Debt
Smart Money

How Banks Can Help You Deal With Debt

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Personal debt weighs on the shoulders of many Australians but support services are available from a wide range of organisations, including banks. While often associated with the loans and credit cards that lead us into debt, banks also provide help and information about how to deal with it.

It is actually a requirement of the Code of Banking Practice, which is designed to encourage banks to offer both objective and personalised services.

As the Australian Banking Association’s Chief Executive, Steven Münchenberg explained:

“The Code of Banking Practice sets out the commitment banks have made to their customers, whether individuals, families or small businesses. The Code sets the standards for fairness, transparency, behaviour and accountability that customers can expect from their banks,” he said.

“Customers want to be confident that their bank will do the right thing by them, and the Code is an important element in giving the assurance that we will.”

Münchenberg also said the latest updates to this code give you more rights and provide straightforward ways for you to complain if you feel your bank has not met its obligations.

The key changes are particularly beneficial for people dealing with debt or other financial hardship. These modifications, which have to come into effect within the next 12 months include:

  1. New and stronger financial hardship provisions
    Banks will need to be more alert to people who may be in financial difficulty, respond promptly to requests for assistance, and ensure staff are well trained in understanding the bank’s financial hardship commitments.
  2. A commitment not to combine accounts or assign debt when assessing financial difficulties
    This commitment should mean more effective solutions and support, helping banks avoid giving you a one-size-fits-all answer to hardship.
  3. Provide more information about no or low fee accounts
    This condition applies specifically if you have a Commonwealth concession card, such as a Seniors Health Card, Health Care Card or Pensioner Concession Card.
  4. Clarification that chargeback rights exist for disputed transactions
    If you have a debit card you may not be aware of all your chargeback rights, but there are options even under recurrent payment arrangements.
  5. A commitment that banks will only sell debts to select third parties
    Specifically, banks will only be able to pass on debts if the collection agencies agree to comply with the ‘Debt Collection Guideline: for Collectors and Creditors’.
  6. Annual Reminders
    Banks will have to send you an annual reminder about their insurance obligations if you have a mortgage on a primary place of residence or residential investment property.

Once banks adopt these measures, it should lead to a more effective system for dealing with debt and catching it before things get out of hand for you.

Some of the Big Banks have already adopted the new Code, with ANZ and Commbank announcing their support at the end of January 2013.

Debt Help From Banks

While the Code of Banking Practice outlines your rights and the banks responsibilities to you before or during financial hardship, there are also specific support services available from different lenders.

ANZ, for example, has recently started advertising its Financial Planning services, which can help with everything from cutting down debt to saving more and adding to your superannuation.

Meanwhile, NAB recently announced the introduction of Money Tracker: Australia’s first financial management tool fully embedded in internet banking and directly linked to a customer’s NAB accounts.

Group Executive Personal Banking, Lisa Gray, said new technologies like Money Tracker are another way banks can help customers to better manage their money.

“Money Tracker puts more information in the hands of our customers to help them make fully informed decisions about their finances,” she said.

A similar service is offered with St George’s SENSE accounts, with statements breaking down purchases into different categories and offering insights into where you could save.

The key difference though, is that NAB’s Money Tracker applies to all NAB accounts, which should include your credit cards as well as everyday and saving options.

The introduction of these types of features and services has got the ball rolling, with smaller banks expected to follow.

HSBC, for instance, has been conducting research into savings and retirement to better understand the Australian personal finance outlook, with ith the bank’s latest research showing a strong link between increased savings and financial planning services.

It is easy to get caught up focusing on just meeting repayments when debt is a concern, but understanding your rights and the services available makes a big difference.

The changes made by the Australian Bankers Association and updates from individual banks give you even more opportunities to find a way out of debt and into better financial standing.

Founder - Roland B Bleyer

Roland Bleyer

Founder of Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. Ever popular with no annual fee first year, low purchase rate and 0% balance transfer. Have a look also at the 0% balance transfer HSBC offer with no balance transfer fee, plus an annual fee waiver each year you meet a spend criteria.

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