Following new legislation introduced in November 2016 to provide protections to unfair contract terms for small business, the big four banks have changed their terms to meet new standards.
The Australian Securities and Investments Commission (ASIC) has released a report detailing the changes made to remove unfair contract terms from their small business contract loans for up to $1 million.
In August 2017, the big four banks committed to improving their terms of their small business loans following work with ASIC and the Australian Small Business and Family Enterprise Ombudsman.
The ASIC report:
– Identifies the types of terms in loan contracts that raise concerns under the law.
– Provides specific details about the changes made by the banks to ensure compliance.
– Provides guidance to lenders with small business borrowers to help them assess whether loan contracts meet the requirements under the law.
ASIC will continue to monitor the four banks’ use of the clauses. It will also extend its focus to other lenders’ loan contracts in the market to ensure their contract terms meet compliance under the law.