COSBOA today congratulated the Australian Small Business and Family Enterprise Ombudsman and her staff as well as the Australian Bankers Association on a ground breaking agreement on contract processes and inclusions for small business people.

COSBOA CEO Peter Strong said: “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.

“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 also her team, there are now important protections for small business customers.”

COSBOA notes that banks can no longer call in a default for an unspecified negative change in the circumstances of a small business customer. And 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 who 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.”

Mr Strong added “the other big change is the new maximum threshold for the changes to take effect which is $3 million well up from the $300 thousand set for other contracts. This is much more reflective of the real situation in the small business finance space, we are not wanting 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.”

Finally it is well worth noting that having 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 get and understand small business as people and as important 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.