Resimac joins ASIC’s banking hit list over allegations that it failed borrowers in distress

Resimac Group (ASX: RMC) has joined the corporate watchdog’s hit list of lenders that are alleged to have failed in their duty to home loan customers suffering financial distress.

After taking on National Australia Bank (ASX: NAB) and Westpac (ASX: WBC) last year, the Australian Securities and Investments Commission has filed Federal Court proceedings against non-bank lender Resimac which the regulator is alleging had failed thousands of home loan customers when responding to hardship applications.

The Federal Court claim has alleged that Resimac, which manages non-bank loans provided by Perpetual Trustee Company, took a “one size fits all” approach to hardship applications.

The claim alleges that Resimac typically requested extensive standard information from vulnerable customers without considering whether all of it was relevant and reasonably necessary in light of their individual circumstances and any information they had already provided to Resimac.

ASIC also claims that when vulnerable customers did not provide any of the standard information, Resimac summarily rejected their hardship applications.

Resimac is facing charges that it contravened its obligation as an Australian credit licensee to act efficiently, honestly and fairly between 1 January 2022 and 15 February 2024.

“This approach was particularly unfair for customers experiencing vulnerability, for example, related to domestic and family violence, bereavement, separation or poor health, who were least likely to be in a position to provide the required standard information,” says ASIC deputy chair Sarah Court.

“As ASIC’s report on hardship last year showed, failures in the approach and time taken to assess hardship applications can cause significant consumer harm, with many customers withdrawing from the process.

“Lenders and managers of consumer loans must do more to support customers in difficult financial circumstances, and not put up barriers or apply a faceless, cookie-cutter approach.”

Court says this approach not only fails to treat customers with respect, “but we contend it is unlawful and breaches the licensee’s obligations”.

“While we acknowledge that many lenders have responded to ASIC’s demand to improve their practices and frameworks for assessing hardship applications, it comes as too little, too late for many customers experiencing financial distress.”

In a statement to the ASX this morning, Resimac acknowledges ASIC’s court proceedings and concedes it could have done better in dealing with hardship cases in the past while apologising for its actions.

“Since becoming aware of the issue, Resimac has enhanced its processes to give greater support to customers facing financial difficulties, in accordance with ASIC's recommendations,” says the company.

“Resimac is developing a financial contribution program for affected customers, including refunds of fees and interest, which it proposes to implement.

“Resimac is considering the matters raised by ASIC, has co-operated with ASIC's investigation and will continue its co-operation.”

Resimac was among 10 lenders that ASIC reviewed in late 2023 to understand how they are supporting customers experiencing financial hardship.

While this is the first time that ASIC has acted against a credit licensee for alleged failures in their approach to assessing hardship applications, the corporate watchdog is currently suing Westpac and NAB for failing to respond to customers’ hardship notices within the time required by law.

ASIC is seeking declarations, penalties, adverse publicity orders and costs in relation to its action against Resimac.