A raft of Australian fintechs have signed a newly minted code of practice to improve transparency and bolster confidence in the small business lending space.
Released on Friday, the code was formulated and backed by Australia’s Small Business Ombudsman Kate Carnell, the Australian Finance Industry Association (AFIA), FinTech Australia, and lending advisory and SME advocate thebankdoctor.org, operated by Neil Slonim.
Leading small business lending fintechs Capify, GetCapital, Moula, OnDeck, Prospa and Spotcap were all signatories to the code, which will require them to comply with a series of best practice principles when dealing with SME customers.
Alongside pledging to meet all current legal and regulatory requirements for small business lending, the signatories have also agreed to introduce an easy to understand loan summary and contribute to a price comparison document being produced by the code’s organisers.
This document will simply lay out all costs and fees associated with the fintech’s loans, including the total repayment amount, annual percentage rate, and the simple annual interest rate.
Failure to comply with the code will see the offending fintech lender subject to an independent Code Compliance Committee which will be established by AIFA. While the committee will have no legal power, it will call out any signatories it finds to be non-compliant, and is tasked with ensuring all signatories are compliant with unfair contract term laws by December 31, when the code is slated for implementation. Read more
Dominic Powell – Smart Company – 2 July 2018