Corporate regulator the Australian Securities and Investment Commission and the Australian Banking Association have settled on a revised Code of Banking Practice.
The agreement comes after months of disagreement and negotiating and ASIC says the agreement is conditional on an independent review of the definition of a small business within 18 months of the new code commencing.
Some of the key revisions and new rights and protections for small businesses are below, effective from July 1 next year:
Simplified loan contracts written in easy to understand language
Fewer contract conditions for loans under $3 million
More notice time for when loan conditions change to assist business planning
Improved communication and transparency around using valuers and insolvency practitioners
Banks will no longer take enforcement action against a small business with loans under $3 million if they have met loan repayment terms (bankruptcy/loss of licence aside)