Westpac has welcomed the Australian Banking Association’s (ABA) new guidelines encouraging banks to give customers in financial difficulty the option of using a savings buffer as part of the new Financial Difficulty Guidelines for member banks.
“Since leading the industry and introducing the savings buffer earlier this year, 535 customers have had a savings buffer built into their hardship agreements providing them with breathing space to save for unexpected expenses,” said Westpac’s Director of Customer Vulnerability and Financial Resilience, Catherine Fitzpatrick.
“We have been really encouraged by the results so far and are already seeing less customers falling back into repeat hardship,” she said.
In May, Westpac introduced a savings buffer for customers entering financial hardship agreements across mortgages, consumer credit products and some business loans.
“The savings buffer is a short-term strategy to help customers manage their finances used in conjunction with our existing hardship support.
“It helps these customers to keep extra money in their pockets to use as it best suits them – potentially for life events like medical emergencies, fixing a household appliance or a car breakdown, or even paying down their debts,” said Ms Fitzpatrick.
Westpac’s team of experienced hardship consultants work with customers individually to introduce a short-term savings buffer of at least $100 per month when calculating hardship payments, freeing up some money for urgent expenses, paying off higher interest debts or saving for a rainy day.
The savings buffer is used in conjunction with Westpac’s existing hardship support, which may include repayment deferrals, interest rate reductions, loan-term extensions, and referrals to financial counsellors.
The savings buffer is supported by Financial Counselling Australia and Good Shepherd.