Australia has launched an investigation into big banks’ lending practices with small business borrowers, reports said on Wednesday (Aug. 31).
The Small Business and Family Enterprise Ombudsman will head the inquiry, reports said, as federal officials face calls to examine the financial services industry as a whole. While a probe will examine the Big Four banks’ small business lending practices, it will not expand to other areas of the financial services industry.
According to reports, Prime Minister Malcolm Turnbull is looking to avoid the creation of a Royal Commission investigation into the banking sector, which would be a broader probe. Opposition leader Bill Shorten is leading the charge for a heavier look at the sector amid criticism that banks are misleading customers in wealth management advisory services, among other allegations of unfair practices.
For this investigation, however, regulators will explore how current legislation protects small businesses that borrow from traditional banks. Officials plan to present their conclusions and recommendations over possible legislative and regulatory actions in three months.
“The government has a substantial financial system agenda to improve consumer outcomes; however, the ombudsman will be able to identify through a forensic analysis if further reforms are needed,” stated Minister for Revenue and Financial Services Kelly O’Dwyer.
Australia has probed its financial services industry before, having completed its most recent review in 2014, in which the investigative committee proposed 44 recommendations.
Commonwealth Bank of Australia, Westpac Banking, Australia & New Zealand Banking Group and National Australia Bank are the nation’s top four bank lenders.