Top seven fintech business lenders compliant with new code of conduct
The seven largest online small business lenders have opened themselves to scrutiny by an independent oversight committee and pledged to adhere to transparent standards on pricing and dispute resolution, with the Australian Finance Industry Association and small business ombudsman endorsing the start-ups’ efforts at self-regulation.
Under the code, the fintechs have pledged compliance with unfair contract terms provisions and committed to standardise disclosure on interest rates. These were the issues that led to the industry’s biggest player, Prospa, pulling its ASX float last year amid an industry-wide review on standards by the Australian Securities and Investments Commission.
More transparent interest rate disclosure is expected to create competition on pricing as major banks pull back on lending to small and medium enterprises (SMEs) following tougher serviceability assessments prompted by the banking royal commission. The market for online lending to small business is now estimated to approach $1 billion a year.
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