Australia to investigate small business lending practices
(1 September 2016 – Australia) The Australian government has launched an investigation into big banks’ lending practices with small business borrowers.
The Small Business and Family Enterprise Ombudsman will head the inquiry, reports said, as the federal government faces additional pressure to call a royal commission into the financial services industry as a whole.
While an investigation will examine the Big Four banks’ small business lending practices, it will not expand to other areas of the financial services industry.
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.
The Federal Opposition, with support from other parliamentary senators, is leading the charge for a in-depth look at the sector amid ongoing claims that banks and financial insitutions have mislead customers in a range of services including wealth management, property insurance and health insurance products.
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.
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