The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell is pleased the Australian Banking Association (ABA) has responded to some of the recommendations from the Banking Royal Commission, but says there is so much more to be actioned.
“Commissioner Hayne acknowledged the ABA Banking Code of Practice is the chief protection for small business borrowers and as such, it needs real and meaningful changes to give it teeth,” Ms Carnell said.
“We are in discussion with the ABA and have developed a list of amendments to the code that provides a better framework for a balanced relationship between banks and their small business customers.”
Ms Carnell also restated the importance of amending the definition of small business so it applies to businesses with a loan facility of up to $5 million and fewer than 100 full-time employees.
“This definition was backed by the Murray Review, the ABA’s own independent Khoury Review and is applied by the new Australian Financial Complaints Authority,” the Ombudsman said.
“A $3 million aggregate loan limit is just not workable. It potentially excludes a large number of small businesses, particularly those capital intensive businesses such as farms, building and manufacturing.
“Small businesses are the engine room of the Australian economy. They are growing all the time, and reform in this area is vital if we’re to support growth in this sector.
“Banks now have the opportunity to show they’re serious about reform and are willing to change.
“We look forward to a response to our recommendations as a matter of urgency.”