As well as running a substantial Commercial Finance Broking firm with my partners, I have an industry role as the President of the Commercial & Asset Finance Brokers Association of Australia (CAFBA).
Over the last two years in that role, I have needed to make submissions to the ASFBEO Enquiry into Small Business Credit, The Ramsay Review into External Dispute Resolution (EDR) Schemes, the ASIC Enquiry into Flex Commissions, various submissions on the Point of Sale Exemption for motor vehicle dealers, the ASIC Enquiry Broker Remuneration, the Sedgewick Enquiry Broker Remuneration, an ASIC Report into the behaviour of motor insurance providers at the Point of Sale, the Enquiry into Codes of Conduct for Industry Associations, another ASIC Report into investigation of broker fraud, and The Productivity Commission Enquiry into the financial system – among others!
The overarching theme of these enquiries is to determine whether small to medium sized businesses need “consumer” protections when running their businesses.
While I uphold the right of every consumer and every business to be protected from unjust practices and to have ready access to fair remedies, a distinction must be made between the needs of consumers and businesses when seeking to borrow money.
In 30 years of commercial practice I’ve never had a client ask me for extra forms to fill out or more hoops to jump through. They just want to be able to get on with running their businesses, and to be left alone.
At the same time, I constantly have regulators looking into how much I get paid and looking for flaws in the processes I follow, but I’ve never been asked about the outcomes I provide, or how much money I’ve saved my clients, or how much easier I’ve made it for them.
We know that finance is an enabler and that regulation should assist rather than hinder the ability of businesses to expand and grow. Unintended consequences have to be avoided, and any amended or new regulation has to be specifically targeted to areas that actually require improvement, rather than applying broad based “remedies” that simply impose more processes and cost rather than outcomes.
The risk is this big regulatory cloud that constantly hangs over ourselves and banks, is creating an environment where banks over-compensate for the risks of non-compliance, they standardise processes because there are so many codes they have to comply with. That closes gaps and niche markets – and it follows that they become more risk averse and less willing to lend.
Individually these issues don’t mean much, but collectively they are restraining small business owners’ ability to fund their aspirations to grow their businesses and create wealth.
The irony is that the regulatory bodies who are charged with improving conditions for business owners are contributing to the impediments they are meant to be removing, with an exponential risk to the greater economy.
Director, Quantum Business Finance
President, Commercial Asset Finance Brokers Association (CAFBA) Ltd
Deputy Chair, Council of Small Business Organisations of Australia (COSBOA) Ltd