Hardship Policy: What It Is & How to Build One That Works
A hardship policy sets out how your business will support customers who are experiencing financial difficulty to manage their payment obligations — fairly, flexibly and without judgement.
It explains the customer's rights, the business's responsibilities, and the practical help available when someone can't pay.
With cost-of-living pressure pushing more households and small businesses into financial stress, hardship is no longer an edge case — it's a mainstream part of customer service.
And yet too many organisations treat the hardship policy as a PDF to satisfy a regulator: written once, buried on a webpage, and unknown to the frontline staff who actually field the calls.
ACXPA's position is direct: a hardship policy is worthless unless the people answering the phone can spot hardship, respond with empathy, and deliver real flexibility.
The document is the easy part — the capability behind it is the point.
This guide covers what a hardship policy is, what to include, the sector obligations that may apply to you, how to build one that genuinely helps, and how to know it's working.
What it is
A clear, public commitment on how you identify, respond to and support customers in financial difficulty — and what flexible options you'll offer.
Why it matters now
Cost-of-living pressure has driven hardship into the mainstream. Handled well, it protects customers, reduces bad debt, and builds lasting loyalty.
What this guide covers
The definition, what to include, the sector rules that may apply, how to build and run one well, the pitfalls to avoid, and how to measure it.
What is a Hardship Policy?
A hardship policy is a documented commitment that explains how a business assists eligible customers experiencing financial difficulty to better manage what they owe.
It typically sets out the customer's rights, the obligations of the business, how to ask for help, and the kinds of support available — from flexible payment arrangements to referrals for independent advice.
"Financial hardship" simply means a customer is unable to meet their payments, or expects to be unable to, often because of an event outside their control — illness or injury, loss of work, relationship breakdown, a natural disaster, or broader cost-of-living pressure.
A hardship policy exists to meet that moment with structure and compassion instead of a default notice.
In plain English
A hardship policy answers one question for a customer who's struggling to pay: "If I tell you I'm in trouble, what will you do to help — and will I be treated fairly?"
The quality of your answer, delivered by a real person on a real call, is the whole measure of the policy.
✓ What it IS
- A public commitment on how you support customers in difficulty
- A set of rights, responsibilities and flexible options
- A frontline capability — backed by trained, empowered staff
- An early-intervention tool that helps before debt spirals
✗ What it is NOT
- A compliance PDF you write once and forget
- A way to delay or disguise debt collection
- A test customers must "prove" their way through
- A substitute for training the people who deliver it
Why a Hardship Policy Matters
A customer reaching out about money trouble is at one of the most vulnerable points in the entire relationship.
How you respond doesn't just determine whether you get paid — it determines whether they stay a customer, whether they trust you, and increasingly, whether you've met your legal obligations.
In a cost-of-living squeeze, the volume of these moments is only rising.
For your customers
It turns a frightening situation into a manageable one — a clear path, a fair hearing, and practical help, instead of escalating notices and a service cut off.
For frontline & contact centre teams
It gives staff a clear, humane process to follow on emotionally hard calls — reducing improvisation, stress and inconsistency when a customer discloses they're struggling.
For the business & compliance
Early, flexible support recovers more than aggressive collection does — and in regulated sectors, a genuine hardship policy is a legal obligation, not an option.
The editorial point
The cheapest debt to recover is the one you never let spiral. Customers offered early, realistic, sustainable arrangements are far more likely to pay what they can and stay loyal than those pushed toward default.
A good hardship policy isn't charity — it's good commercial sense and good customer service at the same time.
What to Include in a Hardship Policy
An effective hardship policy mirrors the support your team can genuinely deliver. These eight elements cover what most strong policies contain — and what several regulators now expect.
How to ask for help
Clear, low-friction ways for a customer to self-identify — by phone, online or in writing — without having to navigate a maze or repeat their story.
How you identify hardship early
How the business proactively spots payment difficulty — missed payments, repeated extensions, disclosed circumstances — and prompts staff to offer help before it escalates.
An early, empathetic response
A commitment to respond quickly and without judgement — treating the disclosure as a moment for support, not suspicion.
Flexible payment options
Realistic, tailored arrangements — payment plans, extensions, deferrals or reduced payments — matched to what the customer can genuinely afford.
Referral to independent support
Signposting to government concessions and free, independent financial counselling — in Australia, the National Debt Helpline (1800 007 007) is the recognised free service.
Help to reduce ongoing costs
Programs or guidance to lower the customer's ongoing bills where you can — a better-suited plan, efficiency advice, or removing charges that no longer fit.
Protections while in hardship
What you won't do while a customer is engaged — for example, keeping an essential service connected and pausing collection action or debt sale on an active arrangement.
Trained staff & a clear owner
Who is accountable for the policy, and how frontline staff are trained to identify hardship, hold the conversation, and apply the options consistently.
💡 Build the support, then write the policy
Write the policy to describe help you can actually deliver today, then raise the bar. A policy that promises options your systems and staff can't provide is a promise you'll break on the first real call.
Sector Obligations: Where a Hardship Policy is the Law
Whether a hardship policy is mandatory depends on your industry. Some sectors place binding, enforceable obligations on businesses to support customers in payment difficulty; others leave it to good practice.
If you operate in a regulated sector, your policy isn't optional — and the bar is rising.
Energy
Under the National Energy Retail Law, energy retailers must have a customer hardship policy approved by the Australian Energy Regulator (AER).
The AER's Customer Hardship Policy Guideline is binding and enforceable, and is under review across 2025–26.
Telecommunications
The ACMA's Telecommunications Financial Hardship Industry Standard (in force since 29 March 2024) makes hardship assistance mandatory — including proactive identification, staff training, keeping services connected, and a minimum of six assistance options.
Breaches can attract penalties of up to $250,000.
Banking & finance
The 2025 Banking Code of Practice (effective 28 February 2025) broadened the definition of "financial difficulty" to include customers likely to struggle with future repayments, and strengthened expectations to proactively identify and support them.
This is general information, not legal advice. Obligations vary by sector, jurisdiction and the type of customer (residential, small business, not-for-profit), and the rules change.
Energy, telco, banking, water and credit each have their own frameworks. Always check the specific obligations that apply to your business — and design to the spirit of them, not just the letter.
How to Build a Hardship Policy That Works
The document is the easy part.
A hardship policy earns its keep only when the experience behind it is real. Here's the order that works.
Make it easy and safe to ask for help
Remove friction and shame from the first contact. The fewer hoops a struggling customer has to jump through to be heard, the earlier you'll catch the problem — and early is cheaper, kinder and more recoverable than late.
Train and empower the frontline
The policy lives or dies on the call. Train staff to recognise the signals of hardship, hold the conversation with empathy, and apply the options without needing three approvals.
Give them the authority to actually help, and the language to do it well.
Offer real, tailored flexibility
A payment plan the customer can't keep isn't help — it's a second failure waiting to happen.
Build arrangements around what they can genuinely afford, not a fixed template. Sustainable beats aggressive every time.
Signpost independent support
Point customers to government concessions and free financial counselling.
Referring someone to the National Debt Helpline (1800 007 007) isn't passing the buck — it's connecting them to expert, independent help that often makes your arrangement work.
Protect the customer while they're in hardship
Be explicit about what you won't do while an arrangement is active — keep essential services connected, pause collection and debt sale. Protection during the process is what makes customers willing to engage in the first place.
Publish it plainly and review it
Write it in plain English, put it where customers can find it, and review it against real data and any regulatory change at least annually. A hardship policy that drifts from reality stops protecting anyone.
The Benefits of a Strong Hardship Policy
Done well, a hardship policy delivers for the customer, the business and the frontline at the same time — which is rare, and worth getting right.
Retains customers
Customers supported through a tough patch remember it. Fair treatment at the hardest moment builds loyalty that marketing can't buy.
Reduces bad debt
Early, sustainable arrangements recover more than aggressive collection — and cut write-offs, collection costs and disputes.
Manages regulatory risk
In regulated sectors, a genuine policy backed by evidence is your defence. Compliance-on-paper alone is exactly what regulators are now penalising.
Protects reputation
How a brand treats people in trouble travels fast. A compassionate, competent response is a powerful, durable reputation asset.
Supports your staff
A clear process and real authority reduce the stress and moral injury of fielding distressing calls with nothing useful to offer.
Turns crisis into loyalty
Handled with care, a hardship moment can convert a wavering customer into one of your most loyal advocates.
Common Hardship Policy Mistakes
Most hardship failures aren't failures of intent — they're failures of delivery. These are the mistakes that quietly turn a well-meaning policy into a broken promise.
❌ A policy nobody can find
If a struggling customer can't locate how to ask for help in under a minute, the policy has already failed. Make it visible — on bills, on the website, and in the IVR.
❌ Making people "prove" hardship
Heavy documentation demands and interrogation deter the very people who need help most. Minimise the friction; verify proportionately, not punitively.
❌ An untrained frontline
The best policy in the world collapses if the person on the phone doesn't recognise hardship or know what they're allowed to offer. The training matters more than the document.
❌ Rigid, one-size payment plans
An arrangement the customer can't sustain just defers the default and erodes trust. Tailor to capacity to pay, not to a standard template.
❌ Treating hardship as collections
If the hardship process feels like debt collection with a friendlier name, customers disengage. Hardship support and collections are different disciplines with different goals.
❌ Set it and forget it
Rules change and circumstances shift. A policy that isn't reviewed against complaint data and regulatory updates drifts out of compliance and out of touch.
The one that matters most: a hardship policy that exists on paper but fails in practice is worse than honest about its limits.
Both the regulator and the customer judge the lived experience, not the document. If your frontline can't deliver what the policy promises, fix the delivery before you publish the promise.
How to Know Your Hardship Policy is Working
A hardship policy isn't "publish and done". These signals tell you whether yours is genuinely helping — or just decorating a webpage.
How many customers you're reaching
Track how many customers in difficulty actually enter hardship support. If demonstrable cost-of-living pressure is rising but your numbers are flat, people probably can't find the door — or are too afraid to knock.
Time to first meaningful response
Measure how quickly a customer who discloses hardship gets real help, not just an acknowledgement. Speed at this moment is the difference between catching a problem and compounding it.
Sustainable arrangement rate
What share of arrangements do customers actually keep? A high failure rate signals plans built around your targets rather than their genuine capacity to pay.
Escalations & complaints about hardship
Complaints about hardship handling — and escalations to an external ombudsman — are a direct read on whether the experience matches the promise. Track them and act on the themes.
Frontline confidence
Ask the staff who run these conversations whether they feel equipped and empowered. Low confidence is an early warning that the policy isn't reaching the call.
The rule
Measure the customer's experience, not just the policy's existence. The only meaningful test of a hardship policy is whether a real person in real difficulty got real, timely, sustainable help.
Frequently Asked Questions About Hardship Policies
What is a hardship policy?
It's a documented commitment explaining how a business supports customers experiencing financial difficulty to manage what they owe — covering how to ask for help, how the business responds, the flexible options available, and how customers are protected and referred to independent support.
Is a hardship policy legally required?
It depends on your sector. In energy, retailers must have an AER-approved customer hardship policy under the National Energy Retail Law.
In telecommunications, the ACMA's Financial Hardship Industry Standard makes hardship assistance mandatory.
Banking and finance are governed by the Banking Code of Practice and credit law. Other sectors may have no specific mandate but strong reasons to have one.
This is general information, not legal advice — check the obligations that apply to your business.
What's the difference between a hardship policy and a hardship program?
The policy is the public commitment — what you promise and what customers can expect.
The program is the operational machinery behind it: the processes, options, systems, training and staff that actually deliver the help. You need both; a policy without a program is a promise with nothing behind it.
Who qualifies for hardship assistance?
Broadly, any customer who is unable to meet their payments, or expects to be unable to, often due to circumstances outside their control — illness or injury, job loss, relationship breakdown, a natural disaster, or general cost-of-living pressure.
Good policies make qualifying straightforward and avoid putting people through an ordeal to prove they're struggling.
What support should a hardship policy offer?
Typically: flexible and tailored payment arrangements (plans, extensions, deferrals or reduced payments), help to reduce ongoing costs, referral to government concessions and free financial counselling, and protections while the customer is engaged — such as keeping essential services connected and pausing collection.
Regulated sectors may set a minimum number and type of options you must provide.
How do we identify customers in hardship?
Two ways, and you need both. Self-identification: make it easy and safe for customers to tell you.
Proactive identification: watch for signals — missed payments, repeated extensions, disclosed circumstances — and prompt staff to offer help early rather than waiting for a crisis.
Several regulators now expect proactive identification, not just a reactive process.
Should we make customers prove they're in hardship before we help?
Keep it proportionate, and lean toward trust. Heavy documentation demands and interrogation deter the people who most need help and slow down support when speed matters most.
Verify where it's genuinely necessary, but don't build a process that punishes honesty. The goal is to help quickly and sustainably, not to filter people out.
Where can customers get independent financial help?
Free, independent financial counselling is available and a good hardship policy should signpost it.
In Australia, the National Debt Helpline (1800 007 007) is the recognised free, confidential, not-for-profit service, coordinated by Financial Counselling Australia.
Counsellors can help a customer understand their options, access concessions, and negotiate with creditors — which often makes your own arrangement more likely to succeed.
How is a hardship policy different from debt collection?
They have opposite goals. Collection seeks to recover an overdue debt; hardship support seeks to keep a struggling customer connected and on a sustainable footing.
Treating hardship as collection-with-a-softer-voice causes customers to disengage. The two should be clearly separated, with collection paused while a genuine hardship arrangement is in place.
Where to Next
Summary: Hardship Policy
A hardship policy sets out how your business supports customers in financial difficulty to manage what they owe — fairly, flexibly and without judgement.
With cost-of-living pressure pushing more people into hardship, it has moved from a niche compliance task to a core part of good customer service.
In sectors like energy, telecommunications and banking, a genuine hardship policy is now a legal obligation, not an option.
But the document is the easy part. A hardship policy is only as good as the experience behind it — the frontline staff who can spot difficulty, hold the conversation with empathy, and deliver real, sustainable flexibility.
A policy that promises more than your people can deliver does more harm than good, because both the customer and the regulator judge the lived experience, not the PDF.
So build the support first, train and empower the people who deliver it, make it easy and safe to ask for help, signpost independent financial counselling, protect customers while they're engaged, and measure whether real people in real difficulty are getting real help.
Get that right and a hardship policy stops being a cost of compliance and becomes one of the most powerful trust-building things your business does.
