LawAccess NSW > Representing Yourself > Debt > Resolving your dispute

Resolving your dispute with the bank or credit provider

This section has general inform​ation about resolving a dispute about a co​n​sumer credit debt with a bank or other credit provider ('lender').​​

    ​Internal dispute resolution (IDR)

    If you have a consumer credit debt and you are having problems paying your loan, it's important to act quickly.

    You should contact your lender directly to find out about their IDR complaint proc​ess, or chec​k their website for this information. You may need to send a letter or fill out a form.

    The bank must respond t​​​o you in writing within 21 days of receiving your complaint.

    If your complaint is not resolved within a set time frame or if you do not agree with your lender's decision, you can lodge a complaint to an external dispute resolution (EDR) scheme with the Financial Ombudsman Service (FOS) or the Credit and Investments Ombudsman (CIO). For more information, go to the FOS website or the CIO website.

    Hardship variation

    Requesting a hardship variation is a type of IDR. You can contact your lender and ask them to temporarily change your repayment arrangement. This is called an application for 'financial hardship', 'hardship variation' or 'hardship notice'. You can apply for a hardship variation over the phone or in writing.

    When you apply for a hardship variation, you will need to: 

    • ​give details of your account name and number
    • explain your circumstances and why you are having problems paying your loan
    • negotiate to reduce or postpone your repayments.

    After sending your request for a hardship variation, your lender must consider your application and respond to you in writing within 21 days to inform you of their decision. If your lender requests further information, you must provide it within 21 days. 

    If your lender does not accept your application for a hardship variation, you can apply to an external dispute resolution (EDR) scheme.

    AlertIf you have received a statement of claim from your lender, you should immediately apply to an EDR scheme before judgment is entered against you. This will temporarily stop the case while the EDR scheme considers your application. You should get legal advice.

    External dispute resolution (EDR)

    An external dispute resolution (EDR) scheme is a free, independent service for resolving disputes between consumers and credit providers. It is an alternative to going to court, which can be expensive.

    There are two EDR schemes:

    You can lodge a dispute with an EDR scheme:

    • ​if you are unable to resolve your dispute with your lender
    • if you have been served with a statement of claim (and before judgment has been entered).

    AlertTo find out if your lender is a member of an EDR scheme, use the search tool on FOS ​or CIO

    Time limits to apply to an EDR scheme

    The time limits to lodge a complaint with an EDR scheme vary depending on the type of complaint.

    If you have already been through an IDR process with your lender, you can apply to an EDR scheme within two years from the date of the IDR response.

    In all other situations, you can lodge a complaint within six years from the date when you first became aware of the problem.

    Types of complaints considered by EDR scheme

    An EDR scheme can handle complaints about banking, credit cards, mortgages, general and life insurance, financial planning and investment advice. For example, you can apply to an EDR scheme if: 

    • your goods were repossessed by your lender without a default notice
    • your lender has refused your application for a hardship variation
    • your lender gave you an unsuitable loan
    • you have been served with a statement of claim for a consumer credit debt and you want to apply for financial hardship
    • your lender has incorrectly listed a default on your credit file.

    ​Both FOS and CIO can consider consumer credit complaints about credit providers for claims up to $500,000. Compensation is limited to $309,000. You should get legal advice to see if you are entitled to compensation.

    For more information, go to the Financial Rights Legal Centre website.

    Applying to an EDR scheme

    You can lodge a dispute with FOS:

    You can lodge a dispute with CIO:

    Your application should include:

    • the name and contact details of your lender
    • details of the complaint and the outcome you are seeking
    • details of any financial loss you have suffered
    • photocopies of supporting documents (for example, loan documents, letters from your lender, account statements and reports).

    ​Decisions made by an EDR scheme

    If your application has been accepted, the EDR scheme will contact your lender and try to resolve the dispute through negotiation and conciliation.

    If the dispute cannot be resolved by agreement, the EDR scheme will make a decision. If you agree to the decision of the EDR scheme, it will become binding on your lender. If you do not accept the decision of the EDR scheme, you should get legal advice.

    For more information, go to the FOS or CIO website.

    Case studyCase study – Ayla's credit card debts

    Ayla owes $8,000 on her credit card. She has been struggling to pay the minimum monthly repayments and received a default notice from her bank. Ayla contacted FOS for help.​​