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Credit providers prepare for growing demand for financial assistance

According to recent research in the finance sector, there is a growing need for financial assistance to support individuals facing financial hardship, and credit providers are actively working to improve their resources and skills to meet this demand. 

Having skilled credit professionals who can communicate with customers genuinely, openly, and respectfully is crucial in the credit industry. Therefore, credit teams should be equipped with talented individuals and be committed to ongoing development to ensure they can deliver high-quality customer service.

With economic pressures and forecasts pointing towards a potential increase in the demand for financial assistance in short to medium term, all credit providers must prioritise projects that enhance their credit teams’ ability to engage with customers effectively. This will not only improve the customer experience but also help credit providers to meet their business objectives.

Data analysis had revealed that areas with higher levels of overdue credit card accounts before the pandemic tended to respond better to the support measures that were implemented during the pandemic.

However, these areas may also be more vulnerable to new shocks in the future. Therefore, credit providers need to closely monitor these areas and be prepared to provide additional assistance and support if necessary.

The emergence of Buy-Now, Pay-Later services has had a significant impact on consumer demand for credit cards. As a result, it is possible that overdue credit may have shifted accordingly. Credit providers should closely monitor these trends to ensure they remain up to date with the evolving credit landscape.

The Overdue Credit Index Report, which was carried out by experts from the University of Sydney and commissioned by the AICM, analysed levels of overdue credit across a range of financial products in the Australian market using aggregated data on reported account repayment history. 

General Manager at Equifax, Scott Mason, said: “In turbulent economic times, it’s vitally important that credit managers are equipped with the insights and tools they need to enable greater financial inclusion among people experiencing financial stress. Equifax is proud to have contributed to the Overdue Credit Index, helping provide a clear picture of the market to credit managers and empowering them with the information they need to best serve their customers.”

illion CEO, John Banfield, said that many consumers found themselves in a ‘perfect storm’ of rising interest rates and cost of living increases, including higher fuel and energy prices.

“We’re delighted to be part of this research which looks closely at overdue credit and how the industry can play an increasingly important and relevant role in helping their customers to meet the financial challenges they are facing”.

“During COVID, lenders widely offered deferral and hardship assistance to customers, including halting enforcement activities such as selling assets. However, in recent months, it has been difficult for these lenders to return to pre-COVID collection practices, which is starting to result in higher rates of arrears,” Steve Johnson, Kadre Consulting. Director 

“Demand for financial counselling reduced by around 30 per cent during COVID due to increased unemployment benefits and forbearance from creditors. Now, levels are returning to pre-COVID in some agencies, but not yet at that level at the National Debt Helpline. We expect things to worsen as the economy struggles with rising interest rates and cost of living pressures,” Fiona Guthrie, Financial Counselling Australia. Chief Executive Officer.

This findings of the report will be presented in a Webinar on Wednesday 22 February with all interested invited to attend.  Register here

A copy of the report is available here 

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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