The banks were quick to make heroes of themselves with their self-selection into Scott Morrison’s Team Australia at the birth of the COVID crisis. But how long will they keep their medals?
Not too long if their behaviour to loyal customers seeking a break on investment loans is replicated when it comes time to consider what to do about home loans taken by people whose jobs have evaporated through a pandemic none of us saw coming.
The evidence is mounting on a number of fronts that the big banks are quickly retreating to the “tick-a-box” approach to customer need. This may be the best way to protect their balance sheets and keep the dividends flowing for investors and superannuation funds. But there will be casualties — first investors hitting hard times and, ultimately, home owners who will have to sell if they can’t meet their commitments.
The question is how many months it will take before the customers they leave high and dry will highlight how little the banks have really learnt from the Hayne royal commission. It found — apart from appalling behaviour — that banks lacked the three Cs: Compassion, the ability to Communicate, or understand the Context within which their customers lived and worked.
They say they’ve learnt. But we’ve heard that before. Now the depth of their learning will be tested by a recession so deep that it will change the way we live, who we live with, and whether many of us have children.
There are hundreds, no thousands, maybe millions, of tales of misfortune brought on by this pandemic. A deaf ear to the needs of customers fighting to stay ahead need not be one of them. For now, home borrowers are safe, although their circumstances will be subject to individual negotiation over the next two months.
Let’s hope it goes better for most than the experience of those long-term loyal customers now seeking similar reprieves to support their investment borrowings. Here’s just one tiny example that should act as a red alert to all of us, not just the 800,000 Australians who have deferred their loan repayments.
Jane is 52, a mother, and had a senior position in her organisation, until she was “let go”, like thousands of others across the country. Having been a customer of the same big bank since school, she contacted them and asked for her home loan to be deferred. Eventually, that was allowed. But last week, an interest-only investment loan was due to become principal and interest. The investment’s value has fallen — but she thinks it will rise so simply asked for an extension of the interest-only period for a few months to get back on her feet.
“No.’’ That was the answer. No discussion. No negotiation. No debate. “It was simply ‘no’,’’ she says. “They said I could apply for new loan — as long as I had pay slips — and an ability to repay! That’s the whole point. I don’t have a pay slip! They are just ticking boxes. That’s all.’’
The point here is that Jane wants to be a good customer, and not default on a loan. In decades, she’s never missed a single repayment. And the bank’s response was inflexible and indifferent and hardly matched the bravado that accompanied their self selection (and the resulting credit) for Scott Morrison’s Team Australia.
It’s only one example, but we’ve also heard this week of older Australians needing to nominate a retirement date before sourcing a mortgage, that one in five borrowers in one state are falling behind in debt payments, and that half those applying for loans don’t understand some of the terminology used.
The banking regulator is requiring banks to allow people to extend their home loan deferral based on an assessment. And it’s that assessment that is an important opportunity for banks, and an indicator on what’s been learnt from the royal commission.
According to Consumer Action chief executive Gerard Brody, that conversation with customers needs to be both kind and compassionate.
He’s right. Even if there’s not a box to tick for it. That’s the context that matters if banks are to be paid the credit they think they’re due as we all navigate this crisis.
If you’ve got a story about your bank’s behaviour during the COVID-19 crisis, we’d love to hear it. Write to us at [email protected]. Please include your full name to be considered for publication in Crikey’s Your Say section.