In the wake of Australia’s Financial Services Royal Commission and the notorious “Robodebt” saga, the treatment of customers in financial hardship has come under intense scrutiny. Hardship – defined as an inability (not unwillingness) to pay due to unforeseen circumstances – and the care of vulnerable debtors are now central concerns in the finance and debt recovery industry. As a debt recovery firm, we at AMPAC Debt Recovery recognise that compassionate handling of such cases isn’t just ethical – it’s essential for sustainable, fair outcomes. In this article, we examine how the Big Four banks have reformed their hardship management post Royal Commission, how the Australian Tax Office (ATO) adjusted its approach after Robodebt, and how these developments have shaped debt collection practices. We also share AMPAC’s own approach to supporting vulnerable customers through tough times.
The 2017–2019 Royal Commission into Misconduct in Banking exposed serious gaps in how financial institutions supported vulnerable customers. In response, regulators and industry bodies drove significant reforms. The Australian Banking Association’s Banking Code of Practice (2019) introduced stronger obligations for inclusive, fair treatment – including a commitment to take “extra care” with customers who may be vulnerable. This shift has accelerated in recent years, with events like the Royal Commission, COVID-19, and rising living costs pushing lenders toward a customer wellbeing focus.
The fallout from the Robodebt scandal (an unlawful automated welfare debt recovery scheme) has profoundly influenced how government agencies approach debtor hardship. The Robodebt Royal Commission (2023) condemned the scheme as a “human tragedy” and highlighted how it harmed people in vulnerable circumstances. Many were pushed into stress and poverty by aggressive, error-prone debt notices, often without easy recourse. One key finding was the conflict of interest in outsourcing collections: private firms were paid commissions to recover welfare overpayments, incentivising coercive tactics against vulnerable Australians. The Commission concluded that social security debts should always be handled by properly trained government staff, not external debt collectors, given the unique vulnerability of many recipients.
In response, the government scrapped the use of private debt collection agencies for Centrelink debts and issued a formal apology and refunds to hundreds of thousands of affected people. More broadly, by late 2023 it pledged to “improve social security debt arrangements to ensure that debt raising and recovery practices are timely, fair and conducted with empathy and respect”. This means a new emphasis on empathetic, humane debt collection in the public sector – a stark lesson learned from Robodebt’s failures. Face-to-face support services are being expanded for those in hardship, and advocacy groups are pushing for easier avenues to appeal or negotiate government debts. The ATO, while separate from the Robodebt scheme, has also faced scrutiny regarding its treatment of taxpayers in debt. As pandemic relief measures ended, the ATO ramped up pursuit of tax arrears, sparking concern from financial counsellors about “rigid” approaches. In fact, calls to the National Debt Helpline’s Small Business line hit record highs in 2025 – over 60% of callers had tax debt issues.
Debt collection agencies like AMPAC play a key role in this evolved landscape. We act on behalf of creditors, so our approach must align with the high standards now expected across the industry. At AMPAC, our policy is to provide all customers suffering hardship with assistance to meet their obligations – with the overriding goal of ensuring the wellbeing of each customer entrusted to us. This Hardship Policy applies to any customer in financial difficulty, whether or not their debt is covered by consumer credit law, reflecting our belief that everyone deserves a fair go.
Key elements of AMPAC’s approach include:
Early Identification
Assessment and Empathy
Our team assists the customer to complete a Statement of Financial Position and gather any necessary documentation to evaluate their circumstances. Throughout this process, we treat the customer with respect and empathy, understanding that discussing personal finances can be stressful or embarrassing. Each case is evaluated on its own merits – there is no one-size template, as every individual’s situation is unique. Our staff are trained to listen, show understanding, and avoid judgment.
Relief and Flexibility
In many cases, a hardship assessment leads to some form of temporary relief. Depending on the situation, this could involve accepting reduced payments, placing the account on hold for a short period, waiving or reversing interest and fees, or other tailored solutions. We consult with our creditor clients to agree on a solution that is fair, reasonable, and sustainable for the customer. For example, an affordable payment arrangement is often offered, with terms (amount, frequency, duration) documented clearly in writing for the customer. We ensure the plan accommodates the customer’s circumstances – giving them breathing room to stabilise their finances.
Ongoing Support
By maintaining this compassionate framework, AMPAC aligns with the broader industry direction while upholding our company’s core values. Our approach mirrors the “customers at the centre” ethos regulators demand, and we take pride in treating people with dignity during difficult times. Ultimately, helping a debtor overcome hardship isn’t just about recovering what’s owed – it’s about achieving the best possible outcome for all parties, including preserving the customer’s long-term financial health and our client’s relationship with them.
The heightened focus on hardship and vulnerable customers has undeniably shaped the Australian debt recovery market. Today, ethical customer treatment is as important as the dollars recovered. Several trends illustrate this new reality:
Industry Codes and Guidelines
Alongside the banking code, collections are guided by the ACCC/ASIC Debt Collection Guideline, which stresses respectful conduct, flexibility, and recognising vulnerability. Collectors must be mindful of debtors’ circumstances (e.g. mental illness, unemployment, language barriers) and avoid any harassment or coercion. There is a stronger expectation of professionalism and empathy in every interaction.
Hardship Provisions in Contracts
Creditors now often require that their partnering collection agencies follow similar hardship protocols as the banks. It’s common for agreements to mandate that if a customer raises hardship, collection activity pauses and the case is referred or managed under hardship processes. Debt purchasers too have internal hardship programs. In short, compassionate handling is becoming standard practice, not an exception.
Training and Culture
Just as banks upskilled staff, debt collection firms have invested in training on how to identify vulnerability and respond appropriately. Building a culture of empathy – where collectors understand the difference between can’t pay and won’t pay – leads to better outcomes. For instance, an agency that listens and negotiates may help a debtor get back on track, whereas a hardline approach could push them into default or insolvency (helping neither side).
Reputation and Oversight
The post-Royal Commission era, reinforced by lessons from Robodebt, has ushered in a new paradigm for handling vulnerable debtors in Australia. The Big Four banks have lifted their game, embedding hardship support into their DNA and demonstrating markedly improved care for those in difficulty. Government agencies, chastened by past mistakes, are slowly steering toward fairer, more empathetic recovery methods. And throughout the debt recovery sector, firms are adapting – balancing commercial objectives with compassion. At AMPAC, we welcome these developments. Not only do they align with our long-held principles of fairness and respect, but they also help us deliver better outcomes for clients and customers alike. By treating people in hardship with understanding and offering a helping hand, we ultimately recover debt more responsibly. In debt collection today, doing the right thing by vulnerable customers isn’t just a compliance requirement – it’s the cornerstone of effective, professional practice.
AMPAC can help your business manage vulnerable or struggling customers with empathy, compliance, and care. Our experienced team balances compassion with commercial outcomes to ensure fair, sustainable recovery results.
Do you have debt that needs recovering? Are you unsure on where to start? Contact AMPAC Debt Recovery for solutions today and speak to one of our qualified consultants to get you started.
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