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Welcome to 2023 and the first Money Road Newsletter of the Year. There’s been plenty of bad news during the holiday period with not much else to talk about other than the “impending collapse” of the housing market. However, there have other talking points which might have escaped your attention and, as always, we’re here to fill in the gaps.
Banks are staffed by humans and humans make mistakes, so it’s no great surprise that a sum of money could suddenly disappear from an account. With fraud not an issue, one would think the glitch would be resolved pretty quickly and all forgiven. Shamefully, no. A Queensland business owner got nothing but obfuscation and gobbledygook from bank officers at National Australia Bank when he asked what happened to $375,000 mysteriously disappeared from his account just before Christmas. Days of waiting for an answer forced him to contact the media. It was only a call from a journalist that unlocked a brain cell at the bank and the return of the money. Shameful customer service.
Accountant’s who are asked by a lender to confirm the income and financial status of a client find themselves in a tight corner. Their peak body has advised them to refuse this common practice because if the client defaults the accountant risks being sued by a lender looking for a fall guy (an unconfirmed story currently circulating in the industry is of an accountant who spent $400,000 on legal fees defending such an attack). On the other hand, if the accountant refuses to provide a loan letter they could lose a good client. Feelings are running high to the extent that Chartered Accountants ANZ has been told by its members to talk to the banks and sort it out – that accountants should not be used to mitigant lender risk. Some members are calling for those who write loan letters to be banned from the organisation.
Australian born AfterPay , once the flagship of the Buy Now Pay Later industry, has abandoned its operations in New Mexico bidding farewell to customers because of regulatory changes in the State. Legislators have introduced new laws limiting fees on late payments and lowering the cap on small loan interest rates from 175% to 36%.
Meanwhile, BNPL’s in Australia anxiously await deliberations to determine new lending rules for the industry. Treasury identified three options. Westpac supports the toughest which requires BNPL’s to apply the same lending criteria as the banks. It’s hard to see how the industry could survive that. A one month consultation period ended in December, so now its up to the bureaucrats and politicians.
There’s a strong possibility you’ve not heard of Alex Bank. It’s a two-year-old Australian online lender specialising in personal and consumer loans with ambitions to offer mortgages and small business finance. Alex boasts about 2,500 customers and is now celebrating its new status as an Authorised Deposit-taking Institution (ADI) – an honour bestowed by the Australian Prudential Regulation Authority. This is a proud moment, said it’s CEO, Simon Beitz . It’s also a left-field moment because the path to receiving the coveted ADI prize is littered with the corpses of many other fintechs. Xinja and Volt banks handed back their licences as did ME Bank which was folded into BOQ, 86400 was consumed by NAB and UP Bank was acquired by Bendigo and Adelaide Bank.
A recent Treasury report revealed that 20% of small business owners it surveyed admitted to being professionally diagnosed with a mental health condition. Because of the stigma, there’s probably many more. It would be a rare business owner who hasn’t at one time or another experienced anxiety, depression, burnout, stress and insomnia – all symptoms of mental distress. Many grit their teeth and get on with it (which can make it worse) , others sadly abandon their dreams and retire from the field hurt. But, help is available. The federal government is kicking in $15 million to provide free mental health and financial counselling to small business owners. More information about the NewAccess for Small Business Owners program is available by calling 1300 945 301 or on the Beyond Blue website.