PEER-TO-PEER lender, Bigstone, welcomes the comments of Kate Carnell, Australian Small Business and Family Enterprise Ombudsman, regarding the role that fintechs can play in assisting access to capital for businesses.
Published in The Australian on 27 November 2017, the Ombudsman is calling for “the sector to disclose annual percentage rates charged on loans and adopt a code of conduct that would be enforced by the Australian Securities & Investments Commission.”
The article refers to a draft of a report by the Ombudsman, which highlights the need for greater transparency around advertised rates and fees.
Bigstone agrees that borrowers should be offered finance in a manner that is easily comparable between providers and fully supports the development of a code of conduct.
Earlier this year, Bigstone helped co-develop an SME lending charter but initiative was mooted due to lack of support from some of the Fintech Australia members.
Bigstone believes the US’ Small Business Borrower’s Bill of Rights is a good example to follow.
It breaks it down into the following points:
- Transparent Pricing and Terms, including a right to see an annualized interest rate and all fees
- Non-Abusive Products, so that borrowers don’t get trapped in a vicious cycle of expensive re-borrowing
- Responsible Underwriting, so that borrowers are not placed in loans they are unable to repay
- Fair Treatment from Brokers, so that borrowers are not steered into the most expensive loans
- Inclusive Credit Access, without discrimination
- Fair Collection Practices, to prevent harassment and unfair treatment
These rights will protect borrowers by ensuring that they are given the information they need to make informed choices and prevent unfair treatment or discrimination by intermediaries and lenders.
In 2016, the alternative finance lending market (including balance sheet lenders, peer-to-peer and invoice financing) reached $355 million, up from $231 million in 2015. As alternative finance options for Australian SMEs continues to gain momentum – tipped to reach $11.4 billion by 2020 – it is imperative that borrowers are accurately able to compare loans between providers.
The draft report also brings to light the difficulty borrowers face in knowing the true cost of their loan when working with lenders who aren’t forthcoming about how rates and fees are calculated.
Bigstone Finance can offer fast, flexible loans from $10,000 to $5,000,000 for assets and equipment for your business.