The Australian Competition and Consumer Commission (ACCC) has granted interim authorisation to a plan that will help smaller lenders provide loans to small businesses during the COVID-19 crisis.
The move will allow members of the Australian Securitisation Forum (ASF) to collaborate more closely than regulation have previously permitted, to assist small lenders. The ASF is the industry body for participants in securitisation and covered bond markets in Australia. Members include authorised deposit-taking institutions (ADIs), non-ADI lenders, investment banks, investors and service providers such as trustees, accountants and lawyers.
The interim authorisation will allow ASF members to coordinate their efforts to help small lenders maintain liquidity and offer loans to consumers and small businesses who are facing economic troubles due to the COVID-19 pandemic.
This follows the previous unveiling of the $15 billion Structured Finance Support Fund (SFSF) by the federal government that would allow smaller authorised deposit-taking institutions (ADIs) and non-ADI lenders to access funding at competitive prices. The SFSF will be administered by the Australian Office of Financial Management (AOFM).
The AOFM is an Australian government agency tasked with ensuring that the Government’s financing needs in a cost-effective manner and that debt portfolio management reflects the importance of the sovereign bond market in Australian financial markets.
“The Structured Finance Support Fund is likely to be more quickly and effectively implemented when members of the ASF are allowed to work together to support the Australian Office of Financial Management in administering the fund,” ACCC Chair Rod Sims said.
“Many Australian smaller businesses and individuals rely on small lenders. Quick and effective implementation of the SFSF will help ensure that small lenders can continue to support these businesses by offering affordable credit during this very difficult time. It’s also crucial that competition in the loans market in Australia is maintained. The competition provided by small lenders needs to be supported to help mitigate the economic impact of COVID-19.”
With the ACCC authorisation, the ASF and its members will be able to discuss how the AOFM should administer the SFSF, including providing their views to the AOFM about developing measures for issuing new debt, arranging appropriate funding arrangements, allowing for hardship relief for borrowers and ensuring the continued flow of funding to smaller lenders. The AOFM will also update the ACCC about any developments arising out of these discussions.
“It is important to note that ASF members are not authorised to exchange information about margins, costs, repayment terms or specific offers to customers. This is aimed at ensuring competition between lenders continues,” Sims said.
