Financial Regulation

Ombudsman welcomes Commonwealth Bank announcement on least cost routing

admin — Fri, 10 Dec 2021 02:46:22 +0000

Ombudsman welcomes Commonwealth Bank announcement on least cost routing admin Fri, 12/10/2021 - 13:46

23 September 2021

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson today welcomed the announcement by the Commonwealth Bank that it will automatically lower costs incurred by small businesses and family enterprises with a turnover of less than $250,000.

The Ombudsman has repeatedly called on banks and other financial institutions to adopt what is known as least cost routing to slash the high and hidden costs associated with electronic card payments for small operators and family enterprises.

“I congratulate the Commonwealth Bank for hearing the feedback from the small business community and taking this first step which will help a section of the small business community. There is a lot more to be done though, and I urge all banks and financial institutions to address this critical issue,” Mr. Billson said.

“I also welcome the Commonwealth Bank’s announcement that it will waive three months of merchant fees for those small businesses hardest hit by COVID-19 lockdowns. This is a terrific early Christmas present.

“The use of cashless transactions, particularly tap-and-go payments, has dramatically increased due to COVID-19 and it is vital to ensure that all small businesses are being offered the lowest cost options from their service provider or financial institution.

“Many small businesses and family enterprises already operating on tight margins and battling the disruption to their businesses caused by COVID-19 can’t afford the added burden of paying higher than necessary fees for their financial transactions.

“The cost of these higher and hidden charges across the economy is many millions of dollars – money that could be better put to work to grow business and employment prospects.”

Ombudsman welcomes Government’s support for least cost routing

Toby — Thu, 02 Dec 2021 02:21:48 +0000

Ombudsman welcomes Government’s support for least cost routing Toby Thu, 12/02/2021 - 13:21

01 September 2021

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson welcomes the Government’s commitment to lowering costs for businesses through least cost routing.

Treasurer Josh Frydenberg has released the Payments System Review which assessed the adequacy of the current regulatory framework.

“The review recognised that there are regulatory gaps and reform is needed to ensure the system reflects rapid technological change,” Mr Billson says.

“It was pleasing to see the Treasurer’s letter to the Reserve Bank of Australia (RBA) supporting least cost routing.

“The Treasurer’s urging of the RBA’s Payment Systems Board to consider mandating the dual-network debits cards to facilitate least-cost routing is a game changer.

“It is a clear statement that the time for strongly worded letters to financial institutions to ‘do the right thing’ has passed and more decisive action is needed to stop small businesses and family enterprises paying more than they need to for payment services.

“For too long, small businesses have been slugged with unnecessarily high fees from credit card networks, when there is a cheaper option.

“Small businesses are being disproportionally hit by fees, with larger retailers able to bypass full fees by using payment systems directly or by having the market power to negotiate least cost routing with their banks.

“While banks have been doing some good work to support small businesses throughout the COVID-19 pandemic, there is an opportunity to build on this now by making least cost routing the default unless a small business chooses an alternative.

“The Government has committed to consider changes that may be necessary to promote least cost routing, particularly in an online and contactless environment.

“Effective regulation in this area in a post-COVID economy is essential given the shift to online and digital transactions in recent months.”

Ombudsman welcomes cancellation and suspension of Australian credit licences

Toby — Thu, 02 Dec 2021 02:21:01 +0000

Ombudsman welcomes cancellation and suspension of Australian credit licences Toby Thu, 12/02/2021 - 13:21

11 August 2021

The Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson has welcomed ASIC’s announcement that they have cancelled or suspended Australian credit licences for failing to be a member of the Australian Financial Complaints Authority (AFCA).

Australian credit licence holders are required by law to join AFCA, which has been set up to sort out complaints between financial firms that are members and their small business and consumer customers that can’t resolve matters themselves.

In the period 1 January 2021 to 30 June 2021, 24 licences were cancelled.

“AFCA provides free, fast and binding dispute resolution to small businesses, saving them time and money by significantly reducing the need for litigation,” Mr Billson says.

“Small businesses do not have the time or the money to hire lawyers and challenge banks and other financial institutions through the court system to get a fair outcome to a financial complaint.

“If a finance provider that is an AFCA member can’t resolve a complaint directly with a customer, including a small business customer, AFCA decides what a fair and appropriate outcome is and the decision is binding on the financial firm.

“This is a really important service as finance is the oxygen of enterprise, yet too often small and family businesses feel powerless in sorting out complaints they may have with finance providers.

“This move by ASIC serves as a timely and critical reminder to small businesses to ensure the lender or financier they are considering dealing with is an AFCA member.

“Small business borrowers can only access AFCA’s free and independent dispute resolution ‘umpire’ process for their financial complaints if their lender is an AFCA member.

“Not all lenders are AFCA members – in fact many are not – and small businesses need to be aware of the risks and inability to reach out to AFCA to decide a matter.

“My office regularly hears from small businesses that have taken out a loan or some kind of financing deal with a non-AFCA member, and end up in a dispute they are not able to resolve.

“My office can and does help with seeking to facilitate a resolution via mediation, but can’t determine and impose a fair outcome like AFCA can when the finance provider is an AFCA member.

“My tip is to always check out your financing options with an AFCA member for your own peace of mind.”

Small businesses engaged in a dispute with a financial institution are encouraged to contact ASBFEO for assistance on 1300 650 460 or email info@asbfeo.gov.au. For complaints involving an AFCA member, call 1800 931 768 or lodge a complaint online via www.afca.org.au