The Small Business Ombudsman has concluded the hearing of evidence from the four major banks as part of her inquiry into the adequacy of the law and practices governing financial lending to small businesses. Background.

The Inquiry examined cases investigated by the Parliamentary Joint Committee (PJC) on Corporations and Financial Services in its report ‘Impairment of Customer Loans’, and will provide advice to the Government on any deficiencies around the regulation and practices of banks.

The Inquiry will recommend whether additional reform measures should be implemented (legislation, regulations, guidance and practices) to ensure products perform in the way they should, taking into account that consumers have a responsibility to accept their financial decisions, including market losses, when they have been treated fairly, and any impact on the availability and cost of credit to small business.

The videos and transcripts of evidence can be seen at the Ombudsman’s website.

The hearings focused on provisions in loan contracts that can be changed by the banks unilaterally without the agreement of the borrower and loan default provisions.

There was also discussion about whether banks would have to give small business customers at least three months’ notice if there is any prospect that their loan would not be renewed.

It was suggested that the mandatory notice period for rural properties and complex assets should be six months.

The Ombudsman will deliver her report to the Government.