28 April 2017
Sydney, 28 April 2017: The Australian Bankers’ Association has today released its response to the Australian Small Business and Family Enterprise Ombudsman’s report into small business lending.
ABA Chief Executive Anna Bligh said banks supported the recommendations to make banking better for small businesses.
“Small businesses play a pivotal role in our national economy and in local communities. It’s important they can readily access affordable finance to invest and grow.
“Banks recognise they need to improve lending practices so small business customers have more certainty and can better understand loan terms and conditions,” she said.
“There will be a reduction in the number of specific events that could result in enforcing a loan. This means banks will no longer be able to call in a loan when small businesses are acting lawfully and making their payments on time, other than in exceptional circumstances.
“For new or renewed contracts, banks will expand the definition of small business beyond what is required by law so that ‘covenant light’ contracts apply to businesses with total loans under $3 million. This will be done by no later than the end of 2017.
“Banks will also give more notice to customers of changes to loan conditions and decisions on rollover.”
Ms Bligh said the industry supported the Ombudsman’s recommendations for more transparency around how banks work with small businesses.
“The ABA is working with stakeholders on developing best practice industry guidelines on bank valuation practices and the appointment of investigative accountants and receivers for small businesses and farmers.
“Nine of the eleven Ombudsman’s recommendations for banks are consistent with the findings of the independent review of the Code of Banking Practice1, and these new obligations will form part of the revised Code,” she said.
“The new Code will have a dedicated section for small businesses and require banks to simplify loan contracts so they’re written in plain English.”
More information, including a response to each of the Ombudsman’s recommendations, is available here.
Contact: Stephanie Arena 0477 470 677 or Nic Frankham 0435 963 913
Australia’s banks supported their customers as the country entered the COVID-19 pandemic and they continue to support them on the way out. As the initial wave of 6-month loan payment deferrals come to an end, banks have begun to contact customers for their 6-month assessment and to discuss the next stage of support and assistance. … Read more »