A leading consumer advocacy group has condemned the banking sector’s response to customers struck by coronavirus-induced financial hardship in a scorecard that only handed two a pass mark.

But some big four providers questioned the veracity of the report, suggesting it unfairly “ignored” the degree of customer support banks offered amid “unprecedented” numbers of deferred mortgages, credit card payment pauses and small business loan holidays.

Choice on Thursday released its ‘COVID-19 Banking Fairness scorecard’ that assessed the major banks on:

• Whether the provider halted interest from capitalising on home loan repayments
• How their credit card rates compare to the Reserve Bank’s record-low cash rate
• Their proactiveness to waive long-term debt.

According to Choice, only Westpac and NAB scraped through with 59 per cent and 53 per cent ‘fairness scores’ respectively.

Commonwealth Bank and ANZ figured in the high 40s.

Choice CEO Alan Kirkland said the report highlighted the legwork banks need to do to correct a community-wide trust deficit that has lingered since the Banking Royal Commission.

“With many people struggling to manage their finances after a drop in income, the big four banks need to do a lot more,” Mr Kirkland said.

Banks savage rationale behind Choice’s report

The two banks that ‘failed’ Choice’s test – Commonwealth Bank and ANZ – told The New Daily the report selectively ignored their efforts to optimise solutions for customers with lost income.

An ANZ spokesman defended the bank’s record through the pandemic and said Choice’s misrepresentation of its “unprecedented level of customer support” was “disappointing”.

Nearly 100,000 home loans with a collective value of roughly $35 billion have been deferred by the provider since March, and nearly $1 billion in high-risk unsecured loans – including credit cards – have been put on ice.

ANZ has deferred nearly 100,000 customers’ mortgage repayments. Photo: Getty

“While Choice has not provided any detail of its methodology and largely ignored our feedback, we remain focused on supporting our customers through the economic impact of COVID-19,” he said.

“This year we have proactively contacted more than 18,000 customers with long-term credit card debt and offered a significantly reduced rate.”

The bank also provided The New Daily with its full response to concerns tendered by Choice, which pointed out inconsistencies in how the bank’s loan deferral policy and ‘low rate’ credit cards were assessed.

A Commonwealth Bank spokesperson also challenged Choice’s report.

She said it failed to encapsulate the “many public facts about our support for customers during the coronavirus pandemic”, including optimised plans for those in severe financial hardship.

The bank has also introduced a waiver for interest-on-interest accrual on home loans and temporary credit card rate reductions for customers financially affected by COVID-19.

Commonwealth Bank disagrees with Choice’s assessment. Photo: AAP

Spokespeople for Westpac and NAB said they would continue to tailor their responses as they check in with hundreds of thousands of home loan customers to confirm their deferral plans.

That information is expected to inform APRA’s decision on the future of home loan deferrals, including possible extensions.

When asked about the banks’ criticism, Choice policy and campaigns adviser Patrick Veyret told The New Daily it’s a sign some providers are continuing to feign ignorance.

“It’s clear some banks instead chose to bury their heads in the sand and pretend their problems didn’t exist,” Mr Veyret said.

“However, to their credit, some institutions took the [hardship review] process seriously and made positive changes to the way they treat customers during COVID-19.”

Still ‘room for improvement’ as September approaches

Consumer Action Law Centre director of policy and campaigns Katherine Temple said some of the major banks’ initiatives – including pausing mortgages early in the pandemic – should be applauded.

But she said many customers continue to remain in a holding pattern with mounting debt made worse by continued uncertainty over JobKeeper and JobSeeker.

With the federal government and institutions yet to announce stimulus beyond September, action needs to be taken in the coming weeks to avoid a “perfect storm”, she said.

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“It’s clear people are going to be doing it tough well beyond the six-month deferral period, and there have been some really positive conversations between industry regulators and consumer groups,” Ms Temple told The New Daily. 

“But we can’t forget about people who have unsecured debt – like credit cards and personal loans – because not having an asset to protect doesn’t mean they’re not also suffering.”

There are are number of practical solutions that can immediately lift some of the burden off struggling customers, she said.

“Stopping the sales of debt to debt collectors, stopping repossessions of people’s houses and bankruptcy proceedings can give people a bit of room to breathe,” Ms Temple said.