A lack of transparency among fintech business lenders has prompted the industry to adopt a code of conduct
The Australian Small Business and Family Enterprise Ombudsman, FinTech Australia and theBankDoctor.org have worked together to release Fintech lending to small and medium-sized enterprises: Improving transparency and disclosure, a report which aims to standardize disclosure and increase transparency of fintech businesses.
The driving force behind the report
For years, fintech companies spoke of their commitment to transparency, regulation and responsible lending to their small and medium enterprise (SME) customers to help them make informed decisions on business loans, according to Spotcap Australia and New Zealand Managing Director Lachlan Heussler.
Yet, at the same time, the fintech sector recognized its need for a consistent, industry-wide approach that would create something sustainable that would benefit the SME community and the broader Australian economy.
The report provides a glossary of common lending terms, as well as a code of conduct which will set consistent standards about pricing disclosure and help simplify complex contracts. "Transparency and responsible lending is the key to ensuring the ongoing success of our high-growth industry," Heussler said.
Prospa, a co-lead for the Business Lenders Group within Fintech Australia and in developing the industry code of conduct described in the report, said the report will help increase awareness of fintech lenders as an alternative to traditional banks.
"Prospa completely supports helping small business owners understand their total cost of finance. We’re already working with our industry colleagues to evaluate a range of ways to achieve this," joint Prospa CEO Beau Bertoli said.
In the eyes of brokers
For many mortgage brokers, fintech’s move for self-regulation might perhaps be its way of following the footsteps of the Combined Industry Forum (CIF).
The CIF consists of representatives from lenders, aggregators, mortgage brokers, consumer groups, and industry bodies, and follows consultation with regulators and the federal government. It crafted a landmark reform package that aims to improve consumer outcomes and confidence in mortgage broking.
“It has been tremendous to be a part of an industry that has united in its commitment to ensuring that broker remuneration is targeted at promoting strong consumer outcomes…,” Mortgage and Finance Association of Australia (MFAA) CEO Mike Felton said last December. "It is a credit to all industry participants and representatives that they have embraced the task of self-regulation and delivered this suite of genuine reforms in such a timely and comprehensive manner.”
