Small Bizz Buzz: Ombudsman Left Disappointed with Interim Report & Illegal Phoenixing Targeted

From the Ombudsman being disappointed with the baking commission's interim report to a new identification program for company directors; here's what made small business news this week.

Small Business Ombudsman has been left disappointed by the Royal Commission's Interim Report. Source: Supplied

Ombudsman disappointed with Banking Commission Interim Report

Many small businesses will be disappointed by the banking royal commission interim report, according to the Small Business and Family Ombudsman.

The Ombudsman, Kate Carnell, is asking for the Royal Commission to expand its timeframe, to give small business owners an opportunity to share the difficulties they have faced, as a result of aggressive bank behaviour.

Ms. Carnell, believes that small businesses negatively affected by aggressive bank behaviour, have not received adequate consideration from the royal commission.

“The interim report does not address many of the issues that have been raised over a considerable time by small businesses affected by bank misconduct,” says Ms. Carnell.

According to Ms. Carnell, around 2,000 businesses with Bankwest loans were defaulted using overly aggressive tactics, including revaluation of property, changes to loan-to-value-ratios, withholding valuation information and applying high default penalty interest rates.

Ms. Carnell welcomed royal commissioner Kenneth Hayne QC recommendation to change the definition of a loan facility for small business in the Code of Banking Practice to $5 million, instead of the current $3 million.

Illegal Phoenixing targeted by proposed Identification Program

Australian company directors could be required to sign up to a new identification scheme, designed to stop illegal phoenixing activity.

The much anticipated “Director Identification Numbers Legislation,” is designed to help regulators detect, and disrupt phoenixing activity.

The practise of illegal phoenixing, involves company directors deliberately trying to avoid paying creditors, by transferring company assets to another company.

The program would follow directors beyond individual businesses through a database of unique numbers.

Under the proposed changes, new company directors registered under the Corporations Act must apply for an identification number within 28 days of becoming a director.

Directors could face serious penalties, including a potential year in prison if they avoid registering for the lifetime ID.

Consultation on the draft legislation for the scheme will be open until October 26.