Thousands of hardship requests left unanswered by major banks—what does that say about customer care in 2025?

Picture yourself in this situation: you've been banking with the same institution for decades, maybe even since your first job.

Now, facing unexpected medical bills or reduced income, you reach out for help with your mortgage or loan repayments. And your bank simply doesn't respond.

This nightmare scenario is playing out for nearly 3,000 Australians who complained to the financial ombudsman this year about banks ignoring their pleas for assistance during tough times.

What's more alarming? The problem is getting worse, not better.

The numbers tell a troubling story

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The Australian Financial Complaints Authority (AFCA) received over 100,000 customer complaints about financial institutions in 2024 for the first time in its history—a staggering increase that the chief ombudsman described as reaching 'an unsustainable rate'.

Among these complaints, 5,715 involved financial difficulty, representing an 18 per cent surge from the previous year. But here's the kicker: one-third of hardship applicants encountered so many difficulties that they abandoned the application process altogether.

These aren't just statistics—they represent real people facing genuine financial crises, often through no fault of their own.

The complaints authority's lead ombudsman for banking and finance, Natalie Cameron, noted that big banks' automated systems had generated 'cookie cutter' responses that failed to account for individual customers' circumstances. At the same time, smaller lenders often lacked even basic response systems.

Why banks are legally required to respond

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Under the National Credit Code and the Banking Code of Practice, banks are required to work collaboratively with customers to develop sustainable solutions for financial hardship.

When you submit a hardship request, banks generally have 30 days to respond.

If they don't meet this deadline, or if you're unhappy with their response, you can make an internal complaint to have the decision reviewed, and if still unsatisfied, access AFCA's free and impartial dispute resolution service.

The real cost of banking silence

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The consequences of banks ignoring hardship requests extend far beyond paperwork delays. Financial counsellor Claire Tacon explains that borrowers left in limbo often face escalating stress and deteriorating financial situations.

'It's really disappointing that people are coming to us after trying to resolve their issue with the banks, speaking to the hardship department there, but coming away not being assisted and not knowing what their rights are,' Tacon noted.

Consider this real case: A long-term bank customer experienced financial hardship in both 2022 and 2023. Despite alerting her bank, the institution issued a default notice and began enforcement action.

After AFCA's intervention, the bank was required to pay $2,250 in compensation and refund enforcement costs and default interest rates, having acted without proper authority.

The penalties are real

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Banks aren't getting away with poor hardship practices. ANZ has paid a $40 million penalty and NAB has paid $15.5 million over inadequate hardship support processes. The corporate regulator, ASIC, has also brought proceedings against Westpac, which remain before the courts.

Yet despite this regulatory pressure and the impact of increased interest rates and cost-of-living pressures, the problem persists. The substantial rise in complaints reflects financial stress from cost-of-living pressures including rents and high interest rates.

Your action plan if your bank goes silent

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The bigger picture

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Consumers secured $304 million in compensation and refunds after coming to AFCA in 2023, up 38 per cent from the previous year. This demonstrates that the system can work—but only when people know their rights and are willing to pursue them.

Financial Counselling Australia's chief executive, Domenique Meyrick, puts it bluntly: the failure to respond to hardship requests can 'lead, in a very tangible way, to people's financial situation becoming worse' by forcing them into higher-risk borrowing arrangements.

Don't suffer in silence

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The message is clear: if your bank ignores your hardship request, you have options.

The system exists to protect you, but it only works if you use it. AFCA provides genuinely free dispute resolution—there are no fees, no legal costs, and no requirement for lawyers.

As one financial counsellor noted, when AFCA contacts the bank, issues are 'usually resolved'- it just happens later than it should, after unnecessary stress and worry.

Remember, seeking hardship assistance isn't a sign of failure—it's a smart financial strategy during tough times. Banks are legally required to help, and when they don't, there are free services ready to step in and ensure your voice is heard.

What's your experience been with bank hardship departments? Have you had to wait weeks for a response, or have you found a bank that actually listens? Share your story in the comments below—your experience might help another member navigate this challenging situation.