BUSINESS FINANCE WEEKOct 31, 2020

Bastard Bank, Judo Flips, Insolvency Sting

Mea Culpa: Bank Eats Humble Pie

“We regret our action and sincerely apologise for any negative impacts these breaches have cause for our customers.”

So spoke, Marni Baker, managing director of the Bendigo and Adelaide Bank after a serious slapping by the Banking Code Compliance Committee.

The bank was named and shamed after the BCCC found it failed to comply with the consumer protection code in the way it collected debts and treated customers in financial difficulty.

And the winner is……

SME funder, Judo Bank, has taken top spot in LinkedIn’s assessment of Australia’s Top 10 Startups in 2020.

The award measures how well a company uses the social sharing site to reach out to potential employees and customers.

Among other things, Judo was ranked Numero Uno because of its employment growth; the number of non-employees who view or follow its page; and levels of job interest.

Two other privately held finance companies also featured in the Top 10, Volt Bank (2nd) and Xinja (7th) .

The takeaway…..

The award reflects the efforts of the various marketing departments.  Congrats.  It’s not discussed whether the companies offer good products or are good business partners.

Government hobbles insolvency crowd

The Federal Government’s decision to overhaul the insolvency rules for SME’s is going to shrink the incomes of some in the insolvency industry.

For too long struggling small business owners have been the prey of unscrupulous insolvency advisors who charge unconscionable fees to supposedly “help” a business owner through a difficult period.

Now, the government will introduce reforms which allow small business to restructure their debts while remaining in control of their businesses.

The takeaway….

A positive move and about time.

Recommended reading

Here is a thoughtful piece written by Michael Pascoe which was published in the New Daily.   It considers the government’s decision to relax the responsible lending rules and, in my opinion, the over reaction to it.

As witnessed in the earlier paragraph, banks can be bastards and, working as a finance broker prior to the GFC , I witnessed the cowboy culture of some lenders in a highly competitive atmosphere.  However, many of the examples used to highlight the perfidy of the banks failed to address the responsibility of the borrowers involved.

Covid loans panned

Despite the hype the government backed SME loans are disappointing many potential customers.

Under the program the government takes 50% of the risk for loans provided by approved lenders to business owners struggling from the impact of the Covid 19 pandemic.

However,  SmartCompany reports that very few loans have been written and calls the scheme a failure.

SME owners have complained about lender reluctance, unpalatable interest rates and lacklustre marketing.

Applicants claim the banks were pushing them to providing real estate collateral for loans and forcing them to jump through hoops