Commercial lending regulation off the table ... for now

by Adam Smith19 Feb 2013
In deferring action, Treasury indicated that its consultations had found "a need to further examine a number of key issues" relating to business credit.
Gadens partner Jon Denovan previously told Australian Broker the proposed regulations had troublesome aspects, including a proposal to require a permit for commercial lending and broking and new assessment requirement he said would require brokers and lenders to ascertain whether borrowers were prepared to lose their homes as a result of taking out a business loan.
In spite of deferring action on small business credit, Gadens pointed out that the rest of the reforms included in Phase 2 of the NCCP are still on the table. These reforms relate to investment lending, private lending, consumer leases and anti-avoidance provisions.

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  • by John C 19/02/2013 10:23:37 AM

    Thank God for that! The Government has interfered far too much already to the detriment of small business.

  • by Mike Clarke 19/02/2013 10:32:33 AM

    Very pleased to see more consultation occurring as this is a more complex area of lending & cannot be viewed from the same perspective as consumer lending. An important point to note here is that lending in the SME space requires the same general 'risk' assessment as if you were lending in the 'corporate' space. There may be more drilled down specialised areas when dealing with bigger tranches, but in the end fundamental risk analysis remains the same. Flexibility & a certain amount of recogntion for the entrepreneurial aspect is needed when it comes to accepting 'risk' with commercial lending.

  • by Lyn Turner 19/02/2013 10:48:56 AM

    It's a shame the Government didn't put the same careful effort into consumer lending legislation and regulation - it's incredibly ill considered and poorly constructed. At some point the ramifications are going to harm consumers and be felt throughout the finance industry - just when the voters are going to the polls. Not good timing Minister Shorten!