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Tuesday, 8 May 2018
Page: 3362

Small Business Loans

(Question No. 901)

Ms Sharkie asked the Minister for Small and Family Business, the Workplace, and Deregulation, in writing, on 05 February 2018:

Separately against each recommendation, what steps have been taken by the Government to respond to the 15 recommendations of the Australian Small Business and Family Enterprise Ombudsman's report Inquiry into small business loans (12 December 2016, pages 7 and 8).

Mr Laundy: The answer to the honourable member's question is as follows:

The Government directed the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) to undertake an inquiry into the small business lending practices of the major banks and other lenders.

The ASBFEO report made 15 recommendations, 11 of which were directed at industry (numbers 1 to 10, and 12), with 4 directed at the Government (numbers 11, 13, 14, and 15). Steps taken in response to the 4 recommendations directed at Government are as follows.

In response to the ASBFEO recommendations about enhancing small business access to external dispute resolution (Recommendation 11 and 13 refer), the Minister for Revenue and Financial Services wrote to the Ramsay Review Panel to ask them to take particular account of those recommendations as it developed its final report, which was released on 9 May 2017.

The Government accepted all the recommendations of the Ramsay Review, including the central recommendation to establish a one-stop shop external dispute resolution body - the Australian Financial Complaints Authority (AFCA). AFCA will be a free, fast and binding dispute resolution service for consumers and small businesses in relation to all financial disputes, including superannuation disputes.

For small business credit facility disputes, AFCA will be able to consider complaints about credit facilities of up to $5 million and award compensation of up to $1 million. This is almost triple what is currently in place, and gives effect to the Ombudsman's recommendation to establish a one-stop shop with the expertise to resolve disputes relating to credit facilities up to $5 million.

In addition, Primary production businesses will be eligible to receive compensation of up to $2m for small business credit facility related disputes.

The Government has introduced a Bill to establish AFCA, which was passed by the Senate in December 2017 and will now be considered by the House of Representatives. The Government has also indicated that the Royal Commission into Banking and Financial Services will not delay the establishment of AFCA. AFCA is due to commence in the second half of 2018.

The ASBFEO report also recommended a nationally consistent approach to farm debt mediation (Recommendation 14 refers). The Australian Government is continuing to work with the states and territories to investigate the development of a nationally consistent Farm Debt Mediation Scheme. While consensus on an approach is yet to be achieved, work towards a harmonised approach continues, with further discussions between jurisdictions expected to occur at the Agriculture Senior Officials Committee and Agriculture Ministers Forum meetings in April 2018.

The ASBFEO report also recommended (Recommendation 15) that ASIC establish a Small Business Commissioner. ASIC has since established an Office of Small Business that reports directly to ASIC Commissioner, John Price.