ASIC targets Resimac as it claims thousands of customers were distressed by cookie cutter hardship processes

The Federal financial watchdog has accused mortgage lender Resimac of impacting thousands of distressed home customers with an alleged one size fits all approach to hardship application. The Australian Securities and Investments Commission claims Resimac did not take the legally-required level of care with hardship applications from victims of domestic violence, financial abuse, serious illness or mental illness for more than two years. ASIC claims in a new Federal Court action that after receiving hardship pleas, the mortgage provider required the debtors’ to fill out a full statement of financial position and provide supporting documents. ASIC claimed Resimac failed to consider whether all this standard information was “reasonably necessary” given information already known to the lender about the vulnerable debtors’ circumstances. And when a vulnerable debtor did not give Resimac all the standard information, ASIC claims the mortgage provider “summarily rejected” the hardship application and refused to change the battler’s contract. ASIC unveiled the legal action against Resimac on Wednesday along with copies of a concise statement and an originating process it filed in the Federal Court on Tuesday evening alleging it failed to act efficiently, honestly and fairly. Through a network of brokers, Resimac provides housing and other finance to people including the self-employed, contractors and those with previous credit problems. The stock exchange-listed Resimac, formerly knowns as Homeloans, distributes funds provided by Perpetual Trustee Company. Resimac confirmed the prosecution to the ASX on Wednesday and admitted some past shortcomings. The company did not directly ASIC’s Federal Court claims it breached the National Consumer Protection Act obligations from January 2022 to February 2024. Resimac company secretary Katie Brown said the lender’s “previous practices” dealing with hardship notices from customers “could have been better and apologises this has occurred”. “Since becoming aware of the issue, Resimac has enhanced its processes to give greater support to customers facing financial difficulties,” company secretary Katie Browne said in a statement. Ms Brown said Resimac was developing a “financial contribution program for affected customers, including refunds of fees and interest”. ASIC deputy chair Sarah Court said people in vulnerable positions, such as those caught up in family violence or separation, were least likely to have been able to provide the type of information allegedly required by Resimac. Ms Court pointed to an ASIC report last year showing delays caused customers to withdraw from the hardship process, potentially causing serious harm. “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,” Ms Court said. ‘Not only does this approach fail to treat customers with respect but we contend it is unlawful and breaches the licensee’s obligations.”