Good news for small businesses in the last week: the big four banks have honoured their commitment to reviewing their small business loan contracts, with changes set to eliminate perceived unfair terms.
The Australian Securities and Investments Commission (ASIC) recently announced the changes, confirming that the banks have acted on calls to amend their practices - with banks, in some cases, even going further than required by law in addressing concerns.
The changes mean ASIC has had a win in convincing the large lenders it is in their interest to treat small businesses fairly. With little negotiating power, small businesses have sometimes faced a crisis when credit facilities have been withdrawn for no apparent reason other than the bank wishing to re-align its overall risk profile. The ability of the large lenders to do that in future will be more constrained; if credit facilities are changed or withdrawn in future, small business should now have adequate time to make alternative arrangements.
According to ASIC, the changes include:
The changes will be backdated to cover customers who entered or renewed contracts from 12 November 2016 and ASIC will closely monitor the process to ensure the changes are applied.
For more information contact Hadyn Oriti on 02 6583 0449, or visit the ASIC website here.