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Royal Commission Focus on Compensation and Supporting Our Ombudsman

COSBOA members will watch the current hearings of the Banking Royal Commission with deep interest. The business people who have been mistreated must be properly compensated for lost income and for the personal stress and health problems they have experienced.

Peter Strong, CEO of COSBOA, stated “The Banking Royal Commission will focus on small business lending for the next two weeks. The stories will be shocking, and it will show how people have suffered from decisions made by far away head office bankers who are not in touch with the community. When a small business is negatively impacted by decisions like these it affects whole families and often communities as well. We have been working with the banking sector and with Kate Carnell’s office for some years now to fix the problems and we expect that we will not hear these types of stories again. But we must have a guarantee they will not happen.”

The Small Business Loans Inquiry held by ASBFEO early last year highlighted the problems and made a range of comprehensive recommendations on changes that need to occur. We must make sure that any changes do not make it harder to give small businesses the loans they need, that would be a result that would impact on the economy.

Mr Strong added “some of this can be attributed to the lack of bank managers in the community. Without information coming from ‘on the ground’ employees, the management of banks have become remote from the community and do not understand the impact their decisions can have on people. We believe we have come a long way to fixing that problem.”

See the story below which highlights a real issue for small business people, access to finance or the lack of it.

Betty has been working for John Shortbull for 5 years and goes to a bank to get a home loan. The bank employee checks out her income and the mortgage is approved. Very happy Betty.

John Shortbull follows Betty into the bank and meets with the same bank employee. He also asks for a loan…

JS I’d like a loan to expand my business.

Bank Ok – what do you do?

JS I run my own business manufacturing and selling widgets.

Bank Oh, well I’m sorry but a loan will be difficult to approve.

JS What! Why?

Bank You are self-employed and are high risk, sorry.

JS But you just approved Betty’s mortgage.

Bank Yes, she has an excellent secure and well payed job.

JS But I employ her?

Bank Good on you!

JS So I can have a loan?

Bank No.

JS Why?

Bank Because you are high risk as you are a small business owner.

JS But how can I be higher risk than Betty?

Bank She has a good steady job!

JS That I provide.

Bank Yes good on you, great stuff, people like you are the backbone of our community.

JS But I can’t have a loan.

Bank Nope sorry. But if you leave and come back in and ask for a personal loan or a line of credit I’m sure we can arrange something.

JS You want me to change my story?

Bank Yes.

JS Why?

Bank It is easier and cheaper for you. Business loans take too much time, too much paper work and are too expensive. OK?

JS Sigh. OK…….

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