Big four banks agree to ASIC contract changes
The Australian Securities and Investments Commission (ASIC) and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) are welcoming updates from ANZ, Westpac, National Australia Bank (NAB) and the Commonwealth Bank of Australia (CBA) on removal of unfair contract clauses.
ASIC and ASBFEO are in favour of changes to eliminate unfair terms from big four bank contracts in favour of small businesses which would include:
- The banks will no longer have the power to terminate a loan for an unspecified negative change in the circumstances of the customer;
- Banks will now not be able to require their small business customers to cover losses, costs and expenses incurred due to any fraud, negligence or wilful misconduct of the bank, any of its its employees or a receiver specifically appointed by the bank;
- Restricted ability to vary contracts to specific circumstances. Banks must also now provide a period of between 30 and 90 days for a customer to exit it a contract in the situation of a variation that would make them want to.
- Loan documents will not contain 'entire agreement clauses' that exonerate the bank from responsibility for conduct, statements or representations they make to borrowers outside of the written contract.
ASIC and ASBFEO said the four banks have acted on the call from the regulator to change their practices and address concerns raised.
Commenting on the changes, ASIC deputy chair, Peter Kell said the regulator intended to continue its crackdown.
“ASIC will be following up with other lenders to ensure that their small business contracts do not contain unfair terms, and we will continue to work with the ASBFEO on these issues,” he said.
“ASIC welcomes the significant improvements made by the banks to their small business lending agreements. The improvements have raised small business lending standards and provide important protections for small business customers.”
AUTHOR
Hope William-Smith
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
