CHANGES in bank contracts with small business people would boost the economy and be a feather in the ombudsman’s small business cap, according to the Council of Small Business Australia (COSBOA).
COSBOA today congratulated the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and her staff, as well as the Australian Bankers Association on a ground-breaking agreement for processing contracts and inclusions for small business people.
Peter Strong, CEO, COSBOA commented on the impact of these changes for small business people ahead of the Vodafone National Small Business Summit which takes place this week, 23-25 August in Melbourne.
“It’s taken longer than it should have done, but the big four banks have finally agreed to eliminate unfair terms from their contracts. Small business people are now safe from banks unilaterally changing loan contracts. Good on the banks," Mr Strong said.
“Unfair contracts legislation came into effect in November last year and banks were very slow to comply. But thanks to the work of Ombudsman Kate Carnell and her team, there are now important protections for small business customers,” said Mr Strong.
COSBOA notes that banks can no longer call in a default for an unspecified negative change in circumstances of a small business customer. In addition, banks are now able to vary contracts only in specific circumstances.
“These are basic rights that individual customers have had for a long time. It was unfair that small business people were at the mercy of decision from banks that were able to do whatever they wanted, whenever they wanted. The changes are a positive step for business and for the health of our economy,” added Mr Strong.
“The other big change is the new maximum threshold for the changes to take effect which is now $3 million, well up from the $300,000 set for other contracts. This is much more reflective of the real situation in the small business finance space, we do not want to appear greedy, we’d like it to be $5 million, but $3 million is a great leap forward.
“It is important that we acknowledge the work of the Australian Bankers Association who have supported changes in contract inclusions,” concluded Mr Strong.
Finally, it is worth noting the presence of an Ombudsman for small business people, along with the State Small Business Commissioners, has not had a negative impact on big business but indeed has had a positive impact on small business people and the economy.
It is interesting that all the staff of the Ombudsman and commissioners understand small business as people and its wider importance to the economy. Not many agencies have that situation as there always seems to be some ideologue, or some 1990s laissez-faire economist in other government agencies who hold back progress and good regulation.
Kate Carnell, Australian Small Business and Family Enterprise Ombudsman; Judy O’Connell, Victorian Small Business Commissioner and Anna Bligh, CEO of Australian Banking Association will speak at the Vodafone National Small Business Summit, 23-25 August 2017 at the Events Centre Collins Square, Melbourne.
Registrations are open for the Vodafone National Small Business Summit. For more information please visit: www.cosboansbs.com.au