Executive SUMMARY

This report presents an Overdue Credit Index based on aggregate data of reported repayment history credit accounts in Australia. The index covers mortgages, credit cards, and unsecured personal loans, using data from Equifax and illion.

The need for an Overdue Credit Index arises from the extensive demands placed on credit professionals when dealing with customers who are in financial difficulty. The Index also aims to provide transparency around consumer credit in Australia.

The Index shows that the circumstances surrounding the COVID-19 pandemic led to a reduction in the level of overdue credit, particularly with temporary loan deferrals. However, the end of mandated support, rising prices, and interest rate hikes may increase arrears in 2023.

The report also includes insights from interviews with credit professionals and financial counsellors to understand their practices in handling overdue payments and hardship requests. Credit professionals require a broad set of skills and a delicate approach when dealing with hardship requests, as they often stem from challenging circumstances.

Some of the implications of the research are: z Skilled credit professionals are needed to interact with customers in a genuine, open, and respectful way. Thus, credit teams to be resourced with people skills and require continual improvement to handle challenging situations faced by consumers. z The economic pressures and forecasts indicate that the need for financial assistance is likely to grow over the short to medium term. z Therefore, all credit providers should prioritise projects that maximise their credit teams’ ability to engage with customers.