The Council of Small Business Australia (COSBOA) has 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, said, “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.
“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.”
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 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,” Strong concluded.
Strong was speaking ahead of this week’s Vodafone National Small Business Summit in Melbourne.
