When Cleo* lost her job, Westpac delayed her mortgage payments for five months. Then she asked for an extra month – and the bank scrapped her payment plan altogether.
The mother of three says she told Westpac she and her husband would be able to resume monthly payments once she found more work in social services. The bank’s rejection left her in tears, she says.
“The stress has gotten even worse now, because now we’re [approaching] Christmas with three kids and I’ve got no idea what’s going on,” Cleo says.
Banks have continued to dismiss or ignore thousands of requests for help despite facing regulatory action enforcing their obligation to work with struggling customers, the financial ombudsman warned in October.
Westpac was unable to comment on Cleo, because she asked to remain anonymous. But the general manager of customer solutions, Lisa Pogonoski, said the bank aimed to determine the most appropriate support based on borrowers’ ability to repay.
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“Every hardship application is assessed individually, with care and consideration given to the specific needs and circumstances of each customer,” Pogonoski said.
Cleo says the bank paused repayments on the couple’s $520,000 home loan when she was out of work in 2024. It offered another temporary pause after she lost her job in May, with partial monthly repayments of $1,000 to resume in October, returning to full $3,030 monthly payments by December.
Then Cleo realised she couldn’t afford the October payment. She says the bank’s hardship team told her she could cancel her existing arrangement and reapply for a new one, which she accepted.
But she was then told the new application had been declined as she had used hardship arrangements twice in the previous two years.
“There was no empathy in her voice at all,” Cleo says.
Their family home is unlikely to be repossessed, Cleo says, but her husband’s income only just covers their repayments and other living costs. She and her children, aged 10, 7 and 4, will have to miss medical appointments to make full repayments before she finds work, she says.
She has taken Westpac to the Australian Financial Complaints Authority (Afca), on the advice of her financial counsellor at the national debt helpline, Kashia Kennedy.
“They aren’t fulfilling their obligation to their customers to offer hardship assistance,” Kennedy says.
More stress for customers
Afca has warned that banks have not sufficiently improved their responses to customers in financial hardship.
Rejections of requests for help prompted 1,110 complaints to Afca in 2024-25, while the number of customers whose bank failed to respond to their request rose to 2,890, up from 2,838 the previous year.
Westpac was one of three big banks to face court action from the Australian Securities and Investment Commission (Asic) this year over support for customers in financial hardship.
Asic took Westpac to court in 2023 for its failure to respond in time to hundreds of requests for hardship assistance over the preceding eight years and has sought a $30m penalty.
Westpac told the federal court it should pay only $10m. A Westpac spokesperson said the bank had reported the failure itself and apologised, then offered customers refunds, waivers and payments.
Claire Tacon, assistant director in financial counselling at the Consumer Action Law Centre, says Westpac has improved but is still failing to consistently deliver for customers facing financial difficulty.
ANZ has paid a $40m penalty and NAB has paid $15.5m over poor hardship support processes.
In September Asic said it was considering further action against banks.
The Commonwealth is the only lender of the big four to avoid regulatory action for its hardship practices in 2025 but has still attracted criticism for flaws in its approach from financial counsellors.
Cam, a 45-year-old Melbourne plumber, faced the prospect of losing his home after CBA chose to stop extending his hardship arrangement.
Cam’s knee was broken in an alleged assault in March, putting him out of work and unable to pay off his mortgage as he waited for public hospital surgery and a compensation payout.
CBA deferred Cam’s payments until October, when he was told him he would not be offered further extensions and the bank would issue a default notice.
A CBA spokesperson said they were unable to discuss specific details relating to Cam, who asked that his surname not be shared, but said cases were regularly reviewed and support was extended where appropriate.
“If something hasn’t gone as it should, we review the situation and work with the customer to find a practical and supportive way forward,” the spokesperson said.
The bank subsequently moved Cam to a new hardship plan. He said the final outcome was welcome, but CBA’s initial refusal caused intense anxiety.
“It’s taken its goddamn toll mentally and physically ... [but] that’s probably the best outcome I could ask for,” he said.
* Name has been changed for privacy reasons
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