Proceedings

On 20 May 2025, ASIC commenced proceedings in the Federal Court of Australia against Resimac Limited (“Resimac”), a large financier in the Australian non-bank lending sector, alleging that Resimac failed to appropriately respond to hardship applications submitted by customers suffering financial distress.

ASIC submits that Resimac contravened ss 47(1)(a) and 47(4) of the National Consumer Credit Protection Act 2009 (Cth) (“Credit Act”) and has applied for:

1. Declaratory relief;
2. Pecuniary penalties;
3. Adverse publicity orders; and
4. Costs.

Resimac is the first credit licensee to be sued by ASIC for their conduct in respect of hardship applications, with the regulator currently pursuing Westpac and National Australia Bank in similar actions.

ASIC alleges that between 1 January 2022 and 15 February 2024, Resimac customers who applied for hardship assistance were required to return a statement of financial position and supporting documentation (“Hardship Documents”) regardless of whether the information was necessary or relevant to Resimac’s obligations under the National Credit Code (“Code”).

Many customers were allegedly vulnerable for reasons of domestic violence, mental impairment, illness or otherwise (“Vulnerable Debtors”). ASIC further submits that when Hardship Documents were not returned by a strict deadline, Resimac would summarily dismiss the hardship application, even in cases where relevant information was already provided or known to Resimac.

Governing Legislation

Section 47 of the Credit Act provides that a credit licensee must ensure credit activities are engaged in efficiently, honestly and fairly. They must also have adequate systems and written plans in place to comply with their obligations.

Section 72 of the Code provides that if a debtor feels they cannot meet their obligations they may give a hardship notice orally or in writing to their credit provider. Practically, this notice might be as simple as the debtor contacting the provider and stating, “I can’t pay.”

Within 21 days of receiving the hardship notice, a credit provider may request that the debtor provide further information within 21 days.

Importantly, any further information requested must be relevant to the debtor’s ability to meet their obligations and how the credit facility might be changed to assist them.

Credit providers are not required to change credit contracts if they do not believe there is a reasonable cause for the customer’s hardship, or they don’t believe the customer could meet their obligations even if the contract were changed.

Credit providers must respond to hardship notices within:

• 21 days if no further information is required;
• 28 days if they request further information but receive no response; or
• 21 days of receiving any further information from the customer.

When responding, credit providers must advise whether they have agreed to change the credit contract.  If they have not, the provider must give reasons and advise the debtor that they can complain to AFCA about the decision.

Resimac’s Standard Procedure

ASIC alleges that Resimac’s hardship process would begin when frontline staff noted an interaction with a customer leading to a hardship notice being given.

In almost all cases, Resimac would provide the customer with a blank statement of financial position (“SOFP”) and request further documentation such as recent income, bank and loan statements, medical certificates and other personal account statements. The customer would have 21 days to comply.

Resimac’s Alleged Conduct

ASIC alleges that Resimac had no internal policies to determine whether customers were vulnerable during the hardship process and would request Hardship Documents without assessing whether they were relevant, necessary or realistically required in writing.

It’s alleged that Resimac took no extra care to simplify the requests made of Vulnerable Debtors or allow greater latitude for them to comply with those requests.

ASIC submits that Resimac rarely varied its requests to accommodate the specific circumstances of customers, vulnerable or otherwise, and often requested information that they had already received or otherwise held on file.

Importantly, it’s alleged that Resimac summarily dismissed any application where Hardship Documents were not provided before the deadline.

Approximately 83% of declined hardship applications were marked ‘SFP not returned’ by Resimac, as alleged from internal documents.

The Harm

ASIC’s concise statement filed in the Federal Court provides examples of Vulnerable Debtors interacting with Resimac’s hardship process in remarkable detail, including six customers experiencing:

1. A mental breakdown;
2. Financial and domestic abuse;
3. Terminal illness; and
4. Mental illness.

All six customers reported that complying with Resimac’s requests was stressful, time consuming, inflexible and not user friendly.

Reasons for declining hardship

In ‘Report 782’ of May 2024 published by ASIC, the regulator explains that the most common reasons for credit providers declining hardship assistance were:

1. The customer did not respond to a request for information;
2. The lender assessed that there was no solution that would solve the customer’s hardship;
3. The lender assessed that the customer was able to meet their obligations; and
4. The customer declined the assistance that was offered because it was not what they requested.

Data from 10 lenders in the report shows that 91-97% of all unsuccessful hardship applications are unsuccessful because of unmet requests for information.

Further, ASIC found that 35% of customers immediately dropped out of the hardship process after giving their first hardship notice.

ASIC summarises its allegations by calling Resimac’s hardship process a ‘one size fits all approach’ which did not provide fair outcomes for customers. Given recent reports published by ASIC providing clear recommendations to lenders, the regulator is showing it will not hesitate to pursue credit licensees with a lax approach to consumer’s rights under the Code. Any subsequent decision in this case will likely provide much needed judicial direction for lenders to refine their internal hardship processes.

This information is of general nature only and Omega Law invites you to contact us for specific advice tailored to your needs and circumstances.