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.”
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
