Our approach and performance
We have taken voluntary steps to ensure our most vulnerable customers are protected from inappropriate offers of credit and that those who find themselves in financial difficulty receive the right support.
|Our Customer Charter commitments|
ANZ was the first bank in Australia to introduce public responsible lending commitments.
Under these commitments, which are part of our Customer Charter (PDF 141kB), ANZ does not offer a credit card limit increase offer to customers who have a recent poor credit performance or are struggling to meet repayments on their ANZ credit card (even if they have not defaulted on their account).
We also do not offer a credit card limit increase to a customer we know is on a fixed income (e.g. receiving a government pension).
Any credit limit increase offer we make:
These promises respond to research we conducted into financial difficulty, which found that some customers can accept these offers without fully considering whether they can afford the extra credit.
|Customer Connect: Supporting customers in hardship|
There will always be some customers who find themselves in financial difficulty due to changed circumstances and other factors.
Our Customer Connect program is designed to make it as easy as possible for customers struggling with their credit to get the help they need.
Spotting customers who need help: Our staff have been trained to proactively identify customers who may benefit from more time and flexibility to manage their finances during a period of financial instability or difficulty. We no longer wait for the customer to ask for help.
No need to prove hardship: We don't require a customer to demonstrate why they are in hardship (e.g. through job loss or illness) before they can access assistance. This requirement was previously a barrier for many customers.
Tailoring plans and cutting red tape: Where possible, staff will tailor temporary repayment arrangements based on what our customers can afford to pay at the time. Payment plans will be finalised over the phone wherever possible.
|Case study: Responsible credit and remote communities|
People in remote communities are often disadvantaged by a lack of access to basic banking services combined with limited understanding of financial products and agreements. Some Indigenous people are at risk of falling victim to predatory lending practices.
We have used our expertise in financial literacy to tailor specific programs designed to help improve the financial skills of Indigenous Australians, in particular our MoneyMinded program.
An example of the challenges faced by consumers and finance companies is the sale of overpriced, unroadworthy and inappropriate vehicles in outback Australia.
ANZ's Esanda subsidiary responded to this issue by establishing a Remote Area Credit Assessment Policy. The Policy stipulates that credit will only be provided for vehicles that are suitable for the conditions they will be driven in. Reduced loan terms have also been adopted to ensure loans do not outlast the useful life of the vehicle.
Our Customer Connect program is designed to make it easy for customers facing financial difficulty to get the assistance they need.
Providing the right support for customers, which may include deferring their repayments, extending their loans or establishing flexible short term arrangements, are designed to get them back on track and build a positive and lasting relationship with ANZ.
In 2012 we assisted approximately 32,000 customers facing financial difficulty due to a change in personal circumstance.
Find out more about how we support people experiencing financial hardship.
Each year thousands of our customers facing difficult and generally unexpected circumstances are referred to our Customer Connect team. In 2011, we helped more than 30,000 people facing hardship in Australia and New Zealand.
In our efforts to continually improve our support for customers we review and pilot new initiatives. In 2011 we piloted a program to proactively contact customers in Australia showing early signs of financial stress. We also continue to review ways in which we can better understand the needs of our customers in New Zealand that are facing financial hardship, and ensure that our customers and frontline staff receive appropriate support to deal with these situations.
Independent debt advice referral service
In 2010 we piloted a service to provide customers in financial difficulty with direct and timely access to a free and confidential debt advice service. The service was offered over-the-phone by financial counsellors. The pilot was run in partnership with Kildonan Uniting Care, recognised experts in the field of financial counselling. We have now completed the pilot and our reviews have concluded that our service provided an additional level of support to customers in financial hardship. The ability to discuss their whole situation and all their financial obligations helped the customers involved in the pilot to feel more in control of their situation and confident that they could navigate their way through.
Early Assistance Pilot
Our Early Assistance Pilot aimed to support customers who were showing signs of potential financial stress, before they missed any repayments. The initiative offered customers access to a range of early assistance measures to help them avoid more serious financial problems down the track.
Independent debt advice referral service
We have commenced a pilot offering a free, independent and confidential debt advice referral service to support our home loan customers in Victoria who are experiencing financial hardship. We are working in partnership with Kildonan Uniting Care, recognised experts in the field of financial counselling, to provide the over-the-phone service and tailored support for customers facing hardship.
Early Assistance Pilot
Our Early Assistance Pilot aims to support customers who are showing signs of potential financial stress, before they miss payments. The initiative offers customers access to a range of early assistance measures to help them avoid more serious financial problems down the track.
The pilot has reached out to 3,500 credit card customers. More than 11% (419) of customers contacted have accepted our offer of support and say they will benefit from changes to their credit card product.
Given the early success of our Early Assistance Pilot, we are now looking to expand the program of early assistance to customers with multiple ANZ products in 2011.
We commissioned an independent expert in consumer issues, Fiona Guthrie, to conduct a review of our hardship program Customer Connect to benchmark it against best practice and identify improvements. We have identified three key initiatives out of the review which will be implemented in 2010:
A responsible marketing workshop led by Professor Pascale Quester (Professor of Marketing, University of Adelaide) was held with key product, marketing, risk and legal representatives from our Australia Division in September. The workshop discussed some of the common ethical issues in marketing, with a focus on direct mail credit marketing, and how to manage the risks those issues pose to a bank.
Recommendations from the review into our hardship processes are being implemented by a dedicated project team in 2010.
Findings from the responsible marketing workshop are being used to develop a set of ethical marketing guidelines for ANZ staff.
We implemented Customer Connect, our new consumer hardship program, throughout our retail banking operations in 2008 and have developed a credit card repayment calculator to provide tips to help our customers stay in control of their credit card.
We experienced two breaches of our responsible lending commitments this year. First, a system change made in February resulted in 1,316 customers being offered Credit Limit Increases that breached our promise. Second, as part of the July Platinum credit card upgrade campaign, the process to remove certain categories of customers from receiving the Credit Limit Increase offer (with the Platinum upgrade offer) was not performed. A total of 737 customers were affected from this breach.
As part of our commitment to exercise leadership in issues affecting our customers, ANZ made a submission to the Australian Treasury Green Paper on Financial Services and Credit Reform.
Our submission supports the national regulation of all forms of consumer credit to avoid inconsistency in credit regulation between States and Territories, and to create a single regime that can adapt to changes in the market place more rapidly.
The Council of Australian Governments has agreed to this measure and transition of credit regulation to the Commonwealth will continue in 2009.
We have committed to reviewing our approach to responsible lending in 2009, including how we market and offer credit, to ensure consistency with the principles of responsible money management and use of credit. Progress on this goal will be reported in our interim and full year Corporate Responsibility Reports.