Australia’s government will probe bank lending to small businesses as Prime Minister Malcolm Turnbull tries to stave off opposition calls for a broader inquiry into the financial system.
The inquiry, to be conducted by the Small Business and Family Enterprise Ombudsman, comes on top of moves to summon the chief executives of the nation’s big four banks to testify before a parliamentary committee once a year. The government has also increased powers for the securities regulator and promised to establish a tribunal to probe instances of poor financial advice.
Turnbull, who was returned to power last month with a wafer-thin majority, is seeking to head off opposition leader Bill Shorten’s attempt to establish a more-powerful and wide-ranging Royal Commission into the banking industry, which has come under fire for giving misleading wealth-management advice to customers and been criticized for failing to pass on in full the central bank’s last rate reduction.
In an emailed statement on Wednesday, the government said the ombudsman will inquire into the adequacy of laws, to address lending practices to small businesses and determine if further regulatory action is required. The findings will be presented in 12 weeks, the statement said.
“The government has a substantial financial system agenda to improve consumer outcomes, however the ombudsman will be able to identify through a forensic analysis if further reforms are needed,” Kelly O’Dwyer, minister for revenue and financial services said in the statement.
Australia concluded a full review of its financial system, the first government inquiry since 1997, in December 2014. The review committee made 44 recommendations to bolster the nation’s financial sector and the government responded last year by asking the banking regulator to take additional steps to ensure the nation’s lenders have strong capital levels.