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Section 13 of the MFAA Code of Practice

Hardship Applications

13.1 If a Member becomes aware, or is advised by a Customer, that the Customer is or may be in financial difficulties, the Member will consider in good faith whether it is reasonably appropriate to vary the payment terms of the credit facility, and if it is appropriate, suggest that the Customer contact the Credit Provider and request the Credit Provider to vary the Customer’s repayment terms.

13.2 Where appropriate, the Member must:

  1. have regard to the Customer’s financial circumstances and consider in good faith and within a reasonable time the Customer’s request to vary the payment terms; and
    1. the Member informs the Customer in writing whether or not it will vary the payment terms; and
    2. if the Member and the Customer agree to vary the payment terms, the Customer fails to meet the varied payment terms; and
  2. suspend any action to recover any payments due under the Credit and, if it has not listed a default already, not list a credit default in respect of the Credit facility against the Customer until:
  3. encourage the Customer to make payments the Customer can afford pending the Member informing the Customer of its decision; and
  4. (have a documented policy and procedure in place for receiving and assessing requests to vary credit contracts upon hardship grounds and must provide information about their hardship policy to a Customer on request.

13.3 Members must act reasonably in assessing a Customer’s request to vary payment terms. Amongst other things, Members must not require:

  1. the Customer to apply for the early release of any part of the Customer’s superannuation entitlements; or
  2. the Customer to obtain funds from family members, friends or other third parties; prior to the Member considering whether to, or agreeing to, vary the payment terms.

13.4 Members who decide to vary the payment terms must promptly and in any case within twenty one calendar days give the Customer written notice setting out particulars of the varied payment terms.

13.5 Members who decide not to vary the payment terms must promptly and in any case within twenty one calendar days give the Customer written notice of:

  1. its decision and the reasons for its decision; and
  2. the Customer’s right to make a complaint to the Member’s IDR and EDR schemes (providing contact details for those schemes) if the Credit falls within the jurisdiction of those schemes.