Small businesses might have played a big part in launching the financial services royal commission, but they were notably absent from Monday’s final report.
That’s the view of small business ombudsman Kate Carnell, who told TICKY that the final document of recommendations missed the mark for Australian businesses and there were some “big disappointments.”
“One of the reasons this whole commission happened was because there was a range of small businesses that were putting pressure on their local members… and those case have not been addressed at all here,” Carnell said shortly after the report was released.
She said of particular concern was the lack of any significant changes to the Australian Banking Association’s (ABA) Banking Code of Practice.
Carnell and other lobby groups have long argued that the banking code of conduct needs a major overhaul to stop lenders from exploiting small business customers.
Although commissioner Kenneth Hayne earlier said the code played an important role in the future of banking, Carnell said it was disappointing to see such little focus in the report on the actual clauses or what needs to change.
“The code in its current form simply isn’t up to scratch,” she said.
“It’s got a range of clauses that say things like ‘you’ve got 30 days before we make you pay back your loan’ and the next clause will say, ‘unless of course we can think of a reason we shouldn’t give you 30 days, and then we’ll give you no time at all.”
“Hayne’s said rightly that the ABA code is the principal source of justice for small business so the banking code needs to be tough.”
Access to funding
A big issue facing the small business sector in Australia is getting access to finance, something Carnell said the report did not address.
According to recent research commissioned by Judo Capital, there’s a funding gap of around $83 billion dollars confronting small businesses today.
“It really hasn’t been addressed at all for small businesses in this space,” she told TICKY.
“[Hayne’s] gone on to say, really, it’s up to the banks with how they manage small business credit. Now right at the moment, there is a credit squeeze. For small businesses to get any finance is really difficult.”
She adds that for many small businesses, issues around funding stem from the misconduct of valuers, liquidators and administrators, however those areas were largely ignored in the final document.
“I tell you what, there’s a huge amount still to do.”
Watch the full interview with Kate Carnell in the video above.