Lawmakers in Australia are pushing for legal assistance for small businesses that find themselves in dispute with banks, reports in The Sydney Morning Herald said Wednesday (April 10).
The Senate’s Legal and Constitutional Affairs Committee released a report earlier this week on its analysis of dispute resolution in the banking industry as the nation continues to crack down on misconduct against small businesses in the industry. Policymakers concluded in the report that consumers and small businesses continue to face barriers in dispute resolution despite efforts by a royal commission to shed light on the matter.
Further, the report noted, legal aid commissions fail to address the needs of small businesses in particular. While the Australian Financial Complaints Authority has been a positive step forward in addressing bank disputes, the committee recommends that its membership be expanded to include small business lenders, FinTechs, and buy-now-pay-later companies to expand protections for small businesses.
The commission is also recommending a levy imposed on financial institutions to support small businesses and connect them to assistance.
The proposals have been met with some resistance, however.
Some government senators argued that “AFCA membership should be as wide as is useful and practical,” but warned against unnecessary levies on banks and early stage FinTechs by requiring them to join the AFCA, according to the publication.
Senator Ian MacDonald described the levy recommendation as “vague,” reports added.
“AFCA’s role as an independent ombudsman is to administer the AFCA Rules,” said AFCA chair David Locke in a statement, adding that he supported many of the recommendations in the report. “If any amendments were to be made to these rules, we would work with the government of the day and our stakeholders to implement these changes fairly and effectively.”
Previous estimates by the small business ombudsman pegged the cost of fighting a small business dispute in the financial services sector at AUS $130,000 (about USD$93,200).