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Law Current to: June 30, 2025
Variation, payment instalment & hardship options
Hardship processes for regulated credit and consumer leases
Providers of regulated consumer credit and consumer leases are subject to statutory requirements to consider and assess requests from customers who are suffering from circumstances of hardship. Most regulated lenders will have information of their websites about financial hardship or distress.
These provisions are designed to ensure that credit providers assess whether customers are able to overcome circumstances of hardship by amendments to the credit contract. They are particularly useful where our clients are effected by temporary circumstances of hardship. Credit providers do not have to agree to changes to the credit contract, particularly if there is no likelihood that their customer would be able to meet the obligations under the contract even it was amended.
There are no limits on the types of circumstances that may be relevant grounds for making a hardship application but relevant circumstances may include illness, unemployment, natural disaster, accidents, domestic violence or circumstances related to a family member.
Currently, there are not upper thresholds for utilising hardship processes, which are contained in the National Credit Code (some historical thresholds apply for loans entered into before 2013).
The mechanical provisions are set out below.
Hardship application
- A customer can tell the credit provider if they consider they will be unable to meet their financial obligations under a credit contract (s72(1)). This is called a ‘hardship notice’ but the customer can give the ‘notice’ orally or in writing.
Credit provider request
- The credit provider may request information from the customer in notice or in writing. They are required to do so within 21 days of the hardship notice (s72(2)).
- The information must be relevant to deciding whether the customer can meet their obligations and if so how to change the contract. The customer is required to comply with the request (s72(3)) and has 21 days to do so.
Notice of decision
The credit provider must give a notice advising of whether they are willing to change the credit contract. If the decision is that the credit provider will not change the credit contract then reasons must be included in the notice together with how the customer can access external dispute resolution.
This notice must be given within:
- 21 days of the hardship notice if no additional information was requested by the credit provider
- 21 days of receiving the additional information from the customer
- 28 days after the date of the notice requesting further information – if the customer does not provide the information
Notice of variation
- If the credit provider has agreed to the changes as a result of a hardship notice, then the credit provider is required to send a notice within 30 days of the agreement that sets out details of the change and other information.
Credit licensees are required to act honestly, fairly and efficiently when applying their hardship processes.
When speaking to our clients in relation to regulated credit we should discuss with them:
- whether they have previously told their financier about circumstances or received any responses; and
- whether they wish to make a hardship application to request a change to the terms of their credit contract.
The types of changes that might be made to a credit contract are not limited in the legislation. Relevant changes to contracts that might be made as a result of a hardship notice may include short interest free periods or periods of reduced payments during any period of hardship or restructuring the loan to allow for smaller payments over a longer period. A credit provider may offer other types of amendment as well.
The credit provider is generally restricted from commencing enforcement proceedings until they have responded to a hardship notice. Section 89A of the NCC sets out how hardship notices may prevent enforcement proceedings. If our client considers that their hardship request has not been properly considered then they may take their complaint to AFCA. There is useful information for our client on the MoneySmart website.
ASIC has also published information relating hardship processes at FAQs: Dealing with consumers and credit | ASIC which, while directed at a credit provider, may provide useful information about the regulator’s expectation of how credit providers will implement financial hardship processes.
ASIC has undertaken reviews of hardship processes (results of which are available via the link above). ASIC has been critical of credit providers who fail to recognise that a customer has made a hardship request (e.g. because the customer did not fill out a form) or where hardship processes are overly prescriptive and create hurdles for accessing the process.
Hardship options relating to fines and penalties (including SPER)
When considering a client’s financial circumstances, it is relevant to know whether the client owes money relating to fines or penalties issued in Queensland. These debts may still be with the agency that issued the fine or if overdue, they will be with the State Penalties Enforcement Registry (SPER) for collection. SPER is a division of Queensland Revenue Office and is responsible for the collection and enforcement of unpaid:
- infringement notice fines;
- court-ordered monetary penalties;
- offender debt recovery orders; and
- offender levies.
Our clients have various options to manage these debts including but not limited to arranging a deferred payment arrangement or a low payment plan that considers their hardship, challenging the underlying fines with the issuing agencies (in particular circumstances) or undertaking a Work & Development Order with SPER.
It is important that a client deals with their debt as SPER has broad powers to take enforcement actions where the is not paid by the due date. This may include suspension of a client’s driver’s licence, issuing fine collection notices to take money from our client’s bank, wages or other persons who hold money on behalf of our client or clamping, seizure and sale of a motor vehicle.
For detailed guidance on the options available to our clients, please refer to » General options to resolve a SPER debt.
Other hardship options including under other industry codes
Even if mandatory financial hardship provisions do not apply, a creditor may have arrangements in place to help customers to manage circumstances of financial distress. Details of these arrangements may be available from the creditors website or by contacting the creditor directly.
In some cases, the creditor may be a subscriber to an industry code which contains provisions relating to the management of financial distress. These codes co-exist with statutory hardship arrangements and may provide promises in addition to statutory requirements. Some of the key obligations are summaries in the table below.
Banking Code of Practice
This code protects individuals and small business customers.
| Obligation | Source of obligation and who it applies to |
|---|---|
| Financial difficulty: If you inform us that you are experiencing financial difficulty (you are unable to repay what you owe, you expect to be unable to pay upcoming repayments, or you are experiencing difficulty meeting your repayment obligations), we will discuss your situation and the options available to you. We will be compassionate in trying to understand and help and will work with you to help you find a sustainable solution. We will make information publicly available about our processes for working with customers in financial difficulty. When we are deciding whether, and how, to help you with financial difficulty, we will take into account the information available to us, including information you give us about your financial situation. Where restoring your financial position is possible, we may be able to help by agreeing to interest only payments for a short period, extending the term of your loan to reduce your repayments or temporarily postponing or deferring payments. Where restoring your financial position is unlikely, we may be able to help by agreeing on an alternative arrangement, changing the terms of the loan, giving you time to sell your property, or giving information about bankruptcy or insolvency arrangements. If you are an individual, we may, at our discretion, reduce or waive your debt if it is an unsecured personal Loan or credit card, on a case-by-case basis and on compassionate grounds. We will tell you in writing whether we will provide you with help in relation to your financial difficulty and the reasons for our decision. | Banking Code of Practice pp 167 – 169, 175 – 180, 184. Banks that are members of the Australian Banking Association and that provide retail banking services (see Code signatories). |
| Financial difficulty arrangement: If we agree to provide you with help in the form of changes to your agreement with us, then we will tell you in writing about the main details of the arrangements, including: • the repayments you need to make under the proposed new arrangement; • what will happen at the end of the new arrangement; and • whether you accepting the proposed new arrangement will have any adverse consequences in relation to banking services or your credit history (for example, an entry in your credit report or cancellation of a banking service). (This does not apply to minor individual instances of help we provide e.g. deferrals, refunds or fee waivers). | Banking Code of Practice p 185. |
| Financial counsellor or representative: If we are working with you to help you to respond to financial difficulties, you can tell us to deal with your financial counsellor or representative, rather than with you. We will respond promptly to you, or your representative’s request to discuss your financial difficulties. | Banking Code of Practice pp 170 – 172. |
| Basic bank accounts: If we identify that you may be experiencing financial difficulty and we contact you to discuss your situation and available options to help, we will offer you basic bank accounts that you are eligible for (if we offer this product). | Banking Code of Practice pp 173, 174. |
| Accessing superannuation: We will not require you to access your superannuation to pay any amount you owe us under a loan (unless you are borrowing for a self-managed superannuation fund). However, you may wish to discuss this option with a financial counsellor. | Banking Code of Practice p 182. |
| Other people who can assist: If you ask us to and where appropriate, we will refer you to financial counselling organisations that may be able to help you. | Banking Code of Practice p 183. |
| Selling your debt: We will not sell your debt to anyone if we are actively considering your financial hardship, or you are complying with a financial hardship arrangement, or you are experiencing vulnerability and we consider the vulnerability is likely to be ongoing with no reasonable prospect of the debt being recovered. | Banking Code of Practice p 190. |
| Combining your accounts: We will not combine your accounts (relating to regulated loans) while we are actively considering your financial hardship, or you are complying with a financial hardship arrangement. | Banking Code of Practice p 193. |
| Complaints relating to hardship: If we are unable to resolve your complaint involving a hardship notice within 21 days we will tell you the reasons for the delay, the date by which you can reasonably expect to hear the outcome of our investigation, give you monthly updates on the progress, tell you about your right to complain to AFCA if you are dissatisfied, and provide you with contact details for AFCA. Exceptions apply to this 21 day time frame if we do not have sufficient information to make a decision or we reach an agreement with you. If we require further information from you then we will request it within 21 days of receiving the complaint. | Banking Code of Practice p 199. |
| Joint accounts and financial difficulty: If you have a joint account with someone and are experiencing financial difficulty, we can assist you. If you ask us to, we can do so without involving the other person initially. | Banking Code of Practice p 149. |
Customer Owned Bank Banking Code of Practice
| Obligation | Source of obligation and who it applies to |
|---|---|
| Financial difficulty information: We will publicise the availability of assistance for customers experiencing difficulty meeting repayment obligations, or obligations under a guarantee to us (financial difficulty). We will do this on our website, in our branches, and periodically on account statements. | Customer Owned Banking Code of Practice p 136. Subscribing mutual banks, credit unions and building societies (see Code signatories). |
| Financial difficulty: We recognise the wide range of circumstances that can lead to financial difficulty including unemployment, ill-health, family breakdown, domestic violence, economic abuse, and natural disaster. We will work with you in a constructive way if you experience financial difficulty. Our staff will be trained to respond compassionately. We will do this whether or not you have a right to seek a hardship variation or change under consumer credit laws. | Customer Owned Banking Code of Practice pp 138, 140. |
| Financial difficulty assistance: If you request financial difficulty assistance, we will: • genuinely consider your request, taking account of your situation. However, we will only be able to do this if you provide us with the financial information and documents we may reasonably need to assess your situation for ourselves; • encourage you to keep making whatever payments you can while we are considering your request; • not require you to access your superannuation to meet your loan obligations (unless you are borrowing for a self-managed superannuation fund); • consider longer term (as well as short-term) financial issues when they are relevant. If you are experiencing longer term difficulties, we will try to develop an appropriate solution with you to allow you to meet your obligations. If you are an individual suffering exceptional circumstances outside your control, we may on compassionate grounds reduce or waive unsecured debt subject to our commercial considerations; • not list your default on your credit reference file while we are considering your request, unless legally required to do so; • not sell your debt while we are still considering your request; and • respond promptly to your request. | Customer Owned Banking Code of Practice p 141. |
| Financial difficulty arrangement: If we reach agreement about assistance to help you with your financial difficulty, we will: • provide confirmation in writing of what we have agreed, including what your obligations will be when our period of assistance ends; • explain the consequences for our reporting to a credit reporting body, and what this means for your credit history; • explain to you any other adverse impacts on your banking services (such as cancellation of your credit card); • not charge you late payment or default fees, or default interest while you are meeting any conditions of that assistance; • not sell your debt while you are meeting any conditions of that assistance; • tell you if we are aware that you are likely to be able to claim on a consumer credit insurance policy that we sold to you; • tell you if we offer banking products with terms that may be more favourable for you, and provide you with information about your options to transfer to these; and • make reasonable efforts to contact you if you breach any conditions of assistance agreed with you, and not re-activate enforcement action until we have given you at least 14 days’ notice. Where we are not able to assist with your financial difficulty, we will: suggest other options that may be available to you, advise you promptly in writing giving reasons, tell you that you may make a complaint to AFCA if you are unsatisfied, and if appropriate offer to provide you with contact details for a free and independent financial counselling or similar service. | Customer Owned Banking Code of Practice pp 142 – 143. |
| Joint accounts and financial difficulty: If you have a joint account with someone and are experiencing financial difficulty, we can try and assist. This can initially be done without involving the other person (if you want this). | Customer Owned Banking Code of Practice p 139. |
| Financial difficulty representative: We respect your right to be represented and will work with your duly authorised representative if you have/nominate one. | Customer Owned Banking Code of Practice p 144. |
| Financial counselling: Where we identify that you may benefit from assistance from a financial counsellor or community worker, we will offer you contact details and may contact you directly for this purpose (even if you have a representative). Where appropriate, we will also warn you against using a debt management firm. | Customer Owned Banking Code of Practice p 145. |
| If you are late in making loan repayments: If you fall behind with your payments, we will contact you and seek to negotiate a mutually acceptable repayment arrangement with you, having regard to your financial circumstances as a whole, as well as your obligations to us. If you cooperate and commit to dealing with the debt, we will work with you (or your representative if you have one). Where relevant, we will draw your attention to our procedures regarding financial difficulty. | Customer Owned Banking Code of Practice p 147. |
Telecommunications Code of Practice and industry standard
| Obligation | Source of obligation and who it applies to |
|---|---|
| Payment assistance policy: A provider that offers to supply telecommunications products to consumers under a consumer contract must establish a payment assistance policy and must comply with that policy. The policy must: • set out the provider’s processes for assisting financial hardship customers; • be focused on the needs and expectations of financial hardship customers; • include a statement of intention, which expressly recognises that the goal of the payment assistance policy is to prioritise keeping customers experiencing financial hardship connected and that disconnection will only be used as a measure of last resort; • state that customers have a right to apply for financial hardship assistance; • state that it is free of charge for customers; • identify the times that customers can contact the provider to speak directly with personnel who are authorised to deal with applications; and • set out information on support services for customers in financial hardship, including how the customer can contact financial counselling services, and the Ombudsman. The policy must also: • permit customers to make an application using all contact methods that it ordinarily makes available to its customers to contact it; • set out how a customer can make an application and monitor the progress of their application; • include a copy of the provider’s application form(s) (if any); • set out the processes the provider uses for managing applications; and • ensure that processes are accessible to consumers with disabilities, from cultural or linguistically diverse backgrounds or with other special needs. | Telecommunications (Financial Hardship) Industry Standard 2024 ss 7 – 13 This commenced on 29 March 2024 and replaces financial hardship-related obligations in the Telecommunications Consumer Protections Code. Applies to participants in the telecommunications industry, being carriage service providers that supply telecommunications products to residential, small business and not-for-profit customers. |
| Identifying financial hardship customers: A provider must take all reasonable steps necessary to identify financial hardship customers for the purpose of advising on options for assistance as early as possible, including by making reasonable efforts to communicate in writing with a customer after it becomes aware that the customer: • has more than 2 consecutive overdue bills; • a total of 3 overdue bills in the previous 6 month period; or • if a customer has arrears of more than $200. | Telecommunications (Financial Hardship) Industry Standard 2024 s 14. |
| Communicating with financial hardship customers: A provider must, where it communicates with a customer and the customer indicates they are a financial hardship customer (which includes for example if they are having difficulty paying a bill or ask about options to assist them to reduce or manage spending): •advise the customer about the provider’s payment assistance policy and how to make an application; • discuss the provider’s options for assistance under the payment assistance policy, and the processes and timeframes for applying for, and accessing, financial hardship assistance; • offer to provide the customer with a copy of the provider’s application form (if any) and its payment assistance policy in a form that is suitable to the customer; • offer to provide an email address and telephone number of a general contact point to communicate with personnel who are authorised to deal with financial hardship matters and to discuss options to assist the customer; and • if the customer has specific accessibility needs, (including a customer with a disability, from a culturally or linguistically diverse background, or who is a victim survivor of domestic or family violence or has other special needs) – assist the customer to make an application. | Telecommunications (Financial Hardship) Industry Standard 2024 s 15. |
| Assessing eligibility: A customer is eligible for financial hardship assistance from their provider if the customer’s situation meets the definition of financial hardship and the customer wishes to access options for assistance made available by the provider. When assessing eligibility to receive financial hardship assistance, a provider must not request a customer to provide information (including documents) to show that they are in a financial hardship situation if the application is for short term assistance, or it appears that the customer may be a victim survivor of domestic or family violence, or that is irrelevant to the application or unreasonably onerous, unless: • the amount to be repaid is more than $1000; • the customer has been a customer for less than 2 months; or • the provider reasonably believes there is a possibility of fraud. | Telecommunications (Financial Hardship) Industry Standard 2024 s 16. |
| Timing for assessments: When a provider assesses a customer’s eligibility to access financial hardship assistance it must: • advise the customer how long it estimates it will take to complete the assessment; • complete the assessment as soon as practicable, but in any event, within 5 business days of receiving a complete application; • inform the customer of the outcome of an assessment as soon as possible, but in any event, within 2 business days after completing the assessment; and • advise the customer immediately if it becomes clear to the provider that the customer cannot be provided with financial hardship assistance because they do not meet the eligibility criteria. | Telecommunications (Financial Hardship) Industry Standard 2024 s 17 |
| Options for assistance: A provider must make available, options for assistance to help financial hardship customers that are realistic, appropriate and tailored to suit the needs of the customer, including a minimum of 6 particular options (2 of which are compulsory). When tailoring an option for assistance to suit the needs of a customer, a provider must account for the customer’s individual circumstances and capacity to pay, including by considering options appropriate to the ongoing management of payments for a customer who is a victim survivor of domestic or family violence. | Telecommunications (Financial Hardship) Industry Standard 2024 s 18. |
| Acceptance and commencement: An arrangement for financial hardship assistance must commence as soon as the customer indicates to a provider that they agree to the arrangement. The provider must, within 2 business days after they agree to the arrangement, give the customer a notice in writing setting out the details of the arrangement for financial hardship assistance including the customer’s rights and obligations. It must state that the customer must advise the provider if their situation changes during the term of the arrangement for financial hardship assistance within 14 days of the change in their situation, identify the circumstances in which credit management action may be undertaken, state the duration of the arrangement, and advise the customer that they may seek a review if their financial hardship situation changes. There must be no charge. | Telecommunications (Financial Hardship) Industry Standard 2024 s 19-21 |
| Review of arrangements: A provider must review a customer’s financial hardship arrangement if the customer informs the provider that their financial hardship situation has changed within 5 business days of being so informed. Where a provider considers that a customer has not complied with an agreed term of an arrangement for financial hardship assistance, the provider must promptly contact the customer to discuss the matter and offer to review the arrangement. | Telecommunications (Financial Hardship) Industry Standard 2024 s 22 |
| Credit management action: When considering whether to take credit management action, a provider must take all reasonable steps to determine if the customer is in financial hardship, in which case the provider must offer the customer financial hardship assistance suitable for their situation and take all reasonable steps to keep the customer’s telecommunications service connected, having regard to the essential nature of carriage services and individual circumstances of the customer. A provider must not take credit management action against a customer while the customer is discussing options, or has made an application, for financial hardship assistance, or if the provider has an arrangement for financial hardship assistance on foot with the customer (unless the customer has not met their obligations under the arrangement). A provider must not sell a debt owed by a customer in such circumstances, or if the provider is reviewing the arrangement for financial hardship assistance. | Telecommunications (Financial Hardship) Industry Standard 2024 s 23-25 |
Buy Now Pay Later Code of Practice
These provisions may assist even if the relevant contract does not fall under NCCP Act protections.
| Obligation | Source of obligation and who it applies to |
|---|---|
| Promotional material: We will take reasonable steps to exclude you from receiving promotional material whilst you have a financial hardship arrangement with us. | Buy Now Pay Later Code of Practice p 10.2(b). Applies to the following BNPL providers: Afterpay, Brighte, Humm Group, Payright, Plenti and Zip Co. |
| Hardship information: Once you have become a customer, we will provide you with information about our hardship policies. We will provide information on our website that sets out our hardship policy and contact details, including how to contact the National Debt Helpline. | Buy Now Pay Later Code of Practice pp 10.8(b), 10.10(h). |
| Offering financial hardship assistance: We will treat you fairly, respectfully and consider your specific circumstances if you are experiencing financial difficulty. As part of this commitment we will make sure customers understand they can ask for financial hardship assistance for example, by including information on how to request hardship and who to contact on our websites and /or the digital platforms that we participate in. If we become aware you are having trouble meeting your financial obligations with us, we will discuss your situation and the options available to help you, which may include negotiating a new repayment arrangement. | Buy Now Pay Later Code of Practice pp 14.1 – 14.4. |
| Hardship request: You can make a hardship request in writing, electronically, or by telephone. We will inform you in writing (this can be through electronic communications e.g. email) of the outcome of your request, within 21 calendar days of your request or of you providing us with additional information we request. Where we deny your request we will tell you why and details to contact AFCA if you wish to lodge a complaint. We will also provide you with contact information for financial support services e.g. National Debt Helpline. If you prefer, we will work with your representative (such as, a family member or friend, a financial or legal representative, or a financial counsellor). We will not continue normal collection activity while we are considering how to help you. Our late fees will also be frozen during this time. We will consider whether your payment method (i.e. credit card) remains an appropriate payment method. We will not list your default on your credit reference file while we are considering your request. | Buy Now Pay Later Code of Practice pp 14.5 – 14.12. |
| Financial hardship arrangement: If we agree and enter into a financial hardship arrangement with you, we will retain you as our customer and not refer you to a third-party debt collection agency. If we reach agreement about assistance to help you with your financial difficulty, we will: • Provide confirmation in writing of what we have agreed with you, including what your obligations will be when our period of financial assistance ends; • Not charge you additional late fees while you are meeting the conditions of the financial hardship arrangement; and • Make reasonable efforts to contact you prior to activating (or re-activating) enforcement action where if you breach any conditions of hardship assistance agreed with you and at least 5 business days’ notice. If we cannot agree to a new repayment arrangement, we will give you information on how to contact AFCA. We will also refer you to financial support services, such as the National Debt Helpline. | Buy Now Pay Later Code of Practice pp 14.13 – 14.15. |
| Recovering a debt: If you are in financial hardship, we will consider waiving our fees and charges (including those already applied) and take steps to work out a mutually acceptable repayment arrangement with you. | Buy Now Pay Later Code of Practice p 14.18. |
Arrangements with utility providers
In relation to utility arrears, steps can be taken to apply for financial hardship with the provider. Unfortunately, each provider has a different financial hardship policy that will be available on their website. The relevant procedure should be followed to obtain relief for the client.
The remedies available will also vary but may include:
- time extensions;
- payment plans; and
- waiver of part of the debt, fees or charges.
However, these remedies may be of limited assistance, where the provider is charging the client any ‘late payment’ fees or interest. These could potentially nullify any benefit received from a payment plan or waiver of the debt. Therefore, a waiver of any applicable late payment fee or interest should also be requested.
Different approaches should also be considered depending on whether the overdue amount is historical (in relation to debts relating to an account that has already been closed) or there are arrears, where our client’s account is still open and the client would like try to preserve the service. In relation to historical debts it may be more appropriate to organise a waiver of the debt. This can be achieved by sending the relevant utility provider or debt collector, a letter of waiver stating that the client is experiencing financial hardship and is judgement proof.
Other avenues for relief
The Queensland Government provides a ‘Home Energy Emergency Assistance Scheme’ involving a one off payment of up to $720 once every 2 years, to assist Queensland households to pay electricity bills. To be eligible the person must:
- hold a current concession card; and
- have an income equal to or less than the Australian Government’s maximum income rate for part-age pensioners; and
- be part of their energy retailer’s hardship program.
To receive this payment the client will also generally have to demonstrate that they have experienced a substantial decrease in their household income (e.g. loss of employment, family separation, illness, injury or disability) or high unexpected expenses on essential items.
More details are available on the Queensland Government website and also from the relevant energy provider. This application generally relates to the household income aspects for the client and therefore a case worker or other person providing financial assistance to the client will be better placed to complete this form.
Footnotes
- Regulation 353 TORUM Regulation.
- Vinson v Hongara [2014] QDC 249, [28].
- Section 114 (3) TORUM
- The commissioner, the chief executive or the SPE Act Administering Authority. In practice, notice will need to be given to the Queensland Revenue Office.
