Ombudsman to examine banks’ treatment of small businesses
The government has raised "serious concerns" over how banks are treating their small business customers.
The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has been tasked with conducting an inquiry to address the Australian small business lending market. The inquiry has come about at the request of the Turnbull Government following recommendations by the Parliamentary Joint Committee.
The Ombudsman will examine selected cases that have been identified by the Committee and provide advice to address any deficiencies in regulation.
Speaking to SmartCompany, Carnell said they will require banks to turn up to the inquiry and answer questions.
“The sorts of cases we’ve got on our books at the moment are those where the bank has changed a rule around a loan, halfway through a loan,” she said.
Kelly O'Dwyer, Minster for Revenue and Financial Services said the government had an agenda to improve financial outcomes for consumers, but the Ombudsman will be able to identify if reforms are necessary.
“The Government’s reforms include extending the unfair contract terms protections to small businesses, and improving the regulation of insolvency practitioners,” she said.
Carnell believes the bank's move towards technology and away from people has caused significant problems in the space.
“The demise of the bank manager has been the biggest change I’ve seen in the space, and the move to treat people as numbers,” she told SmartCompany.
“It means the bank decides to change things mid-way based on their own appetite for risk, instead of having business owners sit down with a manager to discuss challenges.”
While it's welcome news for some small business owners, the tactic is also viewed as a move to slow down calls for a banking industry royal commission.
- New report shows “huge contribution” of migrant business owners to Australia
- This startup from Israel is helping Australian small businesses get finance
- How Australia’s fintech SME lenders have learnt from the US
- 9 in 10 SMEs say cash flow problems prevented revenue growth
- Labor proposes new guarantee to stimulate business investment