Banks challenged to become ethical leaders

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has challenged banks to become leaders in ethical business practice.

Speaking at the National Small Business Summit in Melbourne, Ms Carnell said trust in banks had been eroded and must be restored.

In her speech, Ms Carnell also:

  • Welcomed the big-four banks’ commitment to eliminate unfair terms from small business contracts; and
  • Encouraged the growth of alternative lending to improve access to capital.

Corporate regulator ASIC confirmed this week that banks have agreed to implement fairer contracts for small business customers that include important protections.

Banks will no longer be able to unilaterally vary contracts, and unfair clauses such as the banks’ power to default or terminate a loan for an unspecified negative change in circumstances, have been removed.

Ms Carnell said compliance with unfair contract terms legislation and improvements to the banking code of practice had been key recommendations from her 2016 small business loans inquiry.

“Banks can no longer use their market power and their hundreds of lawyers to move all risk to the small business borrower,” she said.

“A fair contract is one where risk is shared and it is clear who bears what risk, and neither party has the power to change that balance unilaterally.

“Historically the banks have required small businesses to sign contracts that have given them the power to change the fundamentals of contracts, interest rates, the amount lent and repayment times, without the agreement of the other party.

“The agreement that ASIC and ASBFEO have reached with the big four banks has changed that.”

Ms Carnell called on the major banks to demonstrate industry leadership in embracing best practice.

“Hopefully this will set the tone for the rest of the financial services sector and their support to small business,” she said.

Ms Carnell repeated her call for the contract safeguards to apply to small business total loan facilities up to $5 million. The legislation requires compliance up to $1 million and the big four banks have agreed to $3 million.

“We’ll be talking to the government, opposition, crossbench MPs and the banks about raising the threshold to $5 million, which is appropriate for capital intensive small businesses and family enterprises such as farms,” she said.

Ms Carnell also endorsed efforts to increase competition in the financial services sector.

“Peter Costello was right when he said on the weekend that access to capital is too restrictive for business and that Australian bank business lending is negligible,” she said.

“Banks are geared towards residential property, which inflates the housing market at the cost of stifling small business investment

“Unless a small business has adequate property as security they have very limited access to finance through traditional banks.

“On a positive note, the alternative finance sector is growing and the government has indicated it wants to reduce barriers to entry.”




The AusMumpreneur Conference and Awards is underway in Sydney

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SYDNEY - Yesterday, 160 women in small business attended the first day of the AusMumpreneur Conference at Sydney’s State Library.

The two-day workshop and conference finishes this afternoon and is followed by the AusMumpreneur Awards which will take place tonight at Doltone House, Sydney. More than 660 000 Australian small business owners are women and over 330,000 are mothers in small business.

Peace Mitchell said, “We are so excited for the awards tonight! It’s our biggest awards ever with over $200 000 in prizes and 275 people from all over Australia going to attend. It’s going to be spectacular.”
Yesterday, mumpreneurs attended workshops with Catherine Langman from Productpreneur Marketing, Louise Marshall from Reckon, Karen McDermott from Serenity Press, Candice Meisels, a PR expert specialising in start-ups and affordable PR, Helen Butler, a professional organiser and Katrina McCarter from Marketing to Mums.

While the workshops were running, finalists met with judges for a series of interviews which will determine the winners of the prestige AusMumpreneur Awards.

On Thursday afternoon, each AusMumpreneur of the Year finalist presented to the audience and judges. Each finalist then had to answer questions from the judges and the audience.

Today, delegates will listen to:

Amy Taylor-Kabbaz from Happy Mama, Karen Gee, Jacinta McDonnell, Urban Yoga and The Human Kind Project, Emeli Paulo, Collective Potential, Rhian Allen, Healthy Mummy, Monique Filer,, Mrinalini Chakrabarty, Google and Peace Mitchell and Katy Garner, the co-founders of the AusMumpreneur Network.
Some interesting statistics:
The AusMumpreneur Network is the number one network for Mums in Business across Australia, according to the Federal Productivity Report 2015.
There are currently 660 000 women in business in Australia. 330 000 are mumpreneurs.

Start Up Smarter Report 2016

About 70 percent of startup founders are aged between 30-40 and the number of female founders are on the rise predicted to increase to 31 percent of founders in 2017 from just 16 percent in 2014.



ARA urges Senate to review the BOOT for retailers at today's hearing

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THE Australian Retailers Association (ARA) will be appearing in front of the Senate Education and Employment Committee today to discuss improving Enterprise Bargaining Agreements (EBA) for retailers in Melbourne today.

The ARA have put forward a submission to the Committee regarding to the Senate’s Penalty Rates inquiring to improve the flexibility of EBA’s and rectify the Better-Off Overall Test (BOOT).

ARA Executive Director Russell Zimmerman said the ARA strongly recommends a review of the BOOT as its current function discourages enterprise bargaining and creates uncertainty during the agreement approval process.

“The BOOT was implemented to provide a simple, flexible and fair framework that enables collective bargaining for enterprise agreements that deliver productivity benefits,” Mr Zimmerman said.

“We are highly concerned that the BOOT is failing to achieve its objectives, and believe it is essential that Fair Work take a more practical approach to its application which is more focused on efficiency.”

The ARA believe the application of the BOOT by the Fair Work Commission (FWC) is a primary reason for the retail bargaining decline.

“Retail employers filing enterprise agreements approved by an overwhelming majority of their workforce are being met with a demanding FWC process,” Mr Zimmerman said.

“This process appears to be directed towards rejecting enterprise level arrangements rather than approving them although employees are clearly better off.”

As retailers are continually facing a fluctuating trading environment, the ARA believe the FWC needs to re-evaluate the unnecessary complications surrounding the BOOT.

To view the ARA’s full submission to the Senate Standing Committees on Education and Employment, please click here.

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $310 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit or call 1300 368.



Small business loan protection threshold should be $5m

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THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has questioned Commonwealth Bank’s commitment to small business lending reform following evidence to a parliamentary select committee.

Ms Carnell said it was good that banks have finally committed to complying with unfair contract terms legislation, but the lending threshold should be $5 million instead of the $3 million they have agreed.

At the Select Committee on Lending to Primary Production Customers in Sydney on August 11, the Commonwealth Bank spokesman said:

"Certrtainly, insofar as the discussions we had with Ms Carnell, we had a debate and a discussion around that. We feel that $3 million is a lot of money. Beyond $3 million, it is starting to get into a very serious amount of exposure. We are very mindful that, obviously, as we lend more money, the risk to our organisation increases in absolute terms. The higher you push that threshold, one of the unintended consequences could be that the banks start to withdraw from the market. Why we feel $3 million is appropriate is that it tries to strike that right balance to achieve for the small business customers and provide greater certainty but also does not have the intended consequence of withdrawing liquidity from the small business market.”

Ms Carnell accused CBA of scaremongering.

“Despite repeatedly asking, we have never received a properly justified explanation of why $5 million is such a problem, even when they have acknowledged that this is a very small percentage of small business loans (above $3m),” she said.

“Threatening to withdraw liquidity from the small business market is a sledgehammer approach that’s farcical and has no justification given the low number of small business loans involved in going from $3m to $5m.”

Ms Carnell said the banks’ own independent expert adviser on the ABA Code of Banking Practice review, the Financial Ombudsman Service and the Government’s response to the Ramsay review on external dispute resolution had all identified a credit facility of at least $5 million as an appropriate threshold.

“By their evidence to the committee, CBA is suggesting that ethical values and best practice don’t apply above a reasonable limit, which is absurd,” she said.

“We’ll be talking to the government, opposition, crossbench MPs and the banks about raising the threshold to $5 million, which is appropriate for capital intensive small businesses and family enterprises such as farms.”




Big Four banks agree to new small business contracts

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CHANGES in bank contracts with small business people would boost the economy and be a feather in the ombudsman’s small business cap, according to the Council of Small Business Australia (COSBOA).

COSBOA today congratulated the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and her staff, as well as the Australian Bankers Association on a ground-breaking agreement for processing contracts and inclusions for small business people.

Peter Strong, CEO, COSBOA commented on the impact of these changes for small business people ahead of the Vodafone National Small Business Summit which takes place this week, 23-25 August in Melbourne.

“It’s taken longer than it should have done, but the big four banks have finally agreed to eliminate unfair terms from their contracts. Small business people are now safe from banks unilaterally changing loan contracts. Good on the banks," Mr Strong said.

“Unfair contracts legislation came into effect in November last year and banks were very slow to comply. But thanks to the work of Ombudsman Kate Carnell and her team, there are now important protections for small business customers,” said Mr Strong.

COSBOA notes that banks can no longer call in a default for an unspecified negative change in circumstances of a small business customer. In addition, banks are now able to vary contracts only in specific circumstances.

“These are basic rights that individual customers have had for a long time. It was unfair that small business people were at the mercy of decision from banks that were able to do whatever they wanted, whenever they wanted. The changes are a positive step for business and for the health of our economy,” added Mr Strong.

“The other big change is the new maximum threshold for the changes to take effect which is now $3 million, well up from the $300,000 set for other contracts. This is much more reflective of the real situation in the small business finance space, we do not want to appear greedy, we’d like it to be $5 million, but $3 million is a great leap forward.

“It is important that we acknowledge the work of the Australian Bankers Association who have supported changes in contract inclusions,” concluded Mr Strong.

Finally, it is worth noting the presence of an Ombudsman for small business people, along with the State Small Business Commissioners, has not had a negative impact on big business but indeed has had a positive impact on small business people and the economy. 

It is interesting that all the staff of the Ombudsman and commissioners understand small business as people and its wider importance to the economy. Not many agencies have that situation as there always seems to be some ideologue, or some 1990s laissez-faire economist in other government agencies who hold back progress and good regulation.

Kate Carnell, Australian Small Business and Family Enterprise Ombudsman; Judy O’Connell, Victorian Small Business Commissioner and Anna Bligh, CEO of Australian Banking Association will speak at the Vodafone National Small Business Summit, 23-25 August 2017 at the Events Centre Collins Square, Melbourne. 

Registrations are open for the Vodafone National Small Business Summit. For more information please visit: