Banks to appear at ASBFEO hearings on small-business loans inquiry

“Our interim loans inquiry report recommended the need for greater emphasis on small-business lending in the Code of Banking Practice, and highlighted the limitations of the Financial Ombudsman Service (FOS) in dealing with disputes between small businesses and their financial lender.”

Executives from the four major banks will attend hearings this week to be conducted by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Ms Kate Carnell to gather information for the ASBFEO’s Small-Business Loans Inquiry.

Senior bank executives from ANZ, NAB, Westpac and the Commonwealth Bank have been summonsed to appear at the hearings – which takes place 29 and 30 November – and will be questioned on their practices in relation to small-business lending. The hearings will not canvas the specific and confidential details of individual cases.

“A range of themes have emerged during the ASBFEO Inquiry process, and a number of potential reform measures have been identified as significant and necessary to a robust relationship between financial institutions and their small-business customers going forward,” Carnell said.

The ASBFEO Inquiry is considering its recommendations and the hearings will question bank executives on these prospective reform measures.

“We’re interested in hearing from the banks about their procedures in relation to loan contracts, dispute resolution services and the treatment of valuations, and we will press them on their willingness to change their approach to things like monetary and non-monetary defaults, and the role of administrators in relation to small-business bank customers,” Carnell said.

The ASBFEO has provided initial findings in relation to access to justice, to the Ramsay review of the financial system’s external dispute resolution and complaints framework.

“Among other measures, our interim loans inquiry report recommended the need for greater emphasis on small-business lending in the Code of Banking Practice, and highlighted the limitations of the Financial Ombudsman Service (FOS) in dealing with disputes between small businesses and their financial lender,” Carnell said.

This week’s hearings follow private hearings, which were held to gather information regarding the individual cases examined as part of the Inquiry process.

The ASBFEO Inquiry was established to investigate the adequacy of the law and practices governing financial lending to small businesses with a specific focus on a select number of cases investigated by the Parliamentary Joint Committee (PJC) on Corporations and Financial Services in its report “Impairment of Customer Loans.”

In accordance with the Terms of Reference, the ASBFEO’s final Inquiry report will provide advice to government on any deficiencies around the regulation and practices of banks, and will not make any determinations in regard to the circumstances of particular cases.

The hearings can be viewed live from 9am via web-stream at www.asbfeo.gov.au.

Inside Small Business

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