Hardship Policy

This policy document sets out the basis on which the CDF Community Fund (Fund) will determine whether “exceptional circumstances” that may lead to financial hardship exist that would warrant the early release of funds to Non-Associate Clients1 (investor).

1. Legal requirements

(a) The Fund is normally not permitted to issue “short term investment products” to investors. The consequence of this is that investors that have invested with the Fund have to provide at least 31 days’ notice or await maturity before all or part of their funds can be repaid to them (subject to the terms and conditions of the relevant product, which may have a longer notice period).

(b) However, the above does not apply (that is, repayment can be made at any time) if the Fund is satisfied that the repayment to the investor would alleviate financial hardship that the investor is suffering or would suffer.

(c) This hardship provision only applies if the investor is an individual.

(d) Any early repayment made by the Fund under this exemption must be:

(i) made following a written request from the investor to the Fund requesting early repayment on the grounds of financial hardship; and

(ii) in accordance with the provisions of this policy document.

 

2. “Exceptional circumstances”

(a) The APRA Instrument (Banking exemption No. 1 of 2017) provides that early repayment is permitted if an investor is subject to “exceptional circumstances” that may lead to hardship.

(b) The requirement for “exceptional circumstances” suggests that the hardship should be some unforeseen and substantial event that has affected or will affect the investor. Such circumstances could include:

(i) sudden and substantial medical expenses or significant health or medical problem;

(ii) death in the family;

(iii) natural disaster;

(iv) litigation or other unforeseen legal expenses; or

(v) other factors resulting in unforeseen change in the investor’s capacity to meet their payment obligations to third parties or to sustain their usual living conditions, whether through a reduction in income or through an increase in non-discretionary expenditure.

(c) Circumstances under which the CDF Community Fund should reject a request for early repayment due to financial hardship:

(i) if the hardship is not financial in nature;

(ii) if the hardship has not yet occurred and will not likely occur within 31 days after the request for payment or before the maturity of a fixed term investment;

(iii) if the investor requiring an early repayment for non-hardship reasons, (e.g. to make an investment elsewhere with the funds, or as discretionary spending);

(iv) if the investor could be financially supported by some other means if the early repayment is not made (e.g if an investor has been made redundant from his or her employment but could sustain himself or herself from the redundancy pay for a period of at least 31 days or until the fixed term investment matures);

(v) if the evidence of hardship provided by the investor is contradictory or incomplete; or

(vi) the investor is otherwise unable to demonstrate to the Fund (acting reasonably) that he or she is or will likely suffer hardship if the early repayment is not made.

(d) The hardship provisions require the investor to be subject (or potentially subject) to financial hardship. Therefore, any potential hardship has to affect the investor directly. It would not be appropriate to allow early repayment in circumstances where the hardship is experienced by someone who is not the investor.

(e) Provided that the Fund is satisfied (acting reasonably) that the investor is or will be subject to exceptional circumstances that may lead to hardship if early repayment is not made, it will not be required to investigate further into each request. For example, the Fund is not required to exhaustively investigate whether the investor has any other means of financial assistance to alleviate the hardship other than early repayment of the funds.

 

3. Procedure

(a) A written request from an investor requesting the early repayment of their funds should be accompanied by sufficient information and/or documents to allow the Fund to assess the situation. This may include:

(i) explaining the nature of the financial hardship that the investor is experiencing or may experience, including how soon they require the repayment of the funds;

(ii) if the financial hardship has not yet occurred, providing sufficient information to allow the CDF Community Fund to determine the likelihood of the hardship occurring if the early repayment does not occur;

(iii) disclosing whether there are any other sources of money that the investor will have access to for the purposes of alleviating the hardship if the request for early payment is denied;

(iv) explaining why the repayment needs to be made within 31 days of the request or before maturity; and

(v) providing documentation that would assist with evidencing the hardship.

(b) Each request for early repayment under the hardship provisions must be assessed on a case by case basis by a case manager assigned by the Fund, acting reasonably and pursuant to the provisions of this policy. The manager may ask further questions or request further information from investors when assessing each request.

(c) When a case manager assesses a request, he or she should take into account the investor’s ability to maintain their usual standard of living if the request is not accepted and, if relevant, may assess an investor’s income against other financial commitments and basic living expenses.

(d) The case manager should respond to the investor within 2 business days of receipt of the request and assess the request as soon as reasonably practicable. The investor should be informed as soon as reasonably practicable as to whether their request for early repayment has been accepted by the Fund or not once sufficient information has been received by the Fund.

This policy was last reviewed on: January 2020.

1 A Non-Associate Client is a person who is not an employee of a Catholic Organisation (as listed in The Official Directory of the Catholic Church in Australia).