Media releases
Westpac simplifies business lending contracts for customers
15 March, 2018
Westpac simplifies business lending contracts for customers
Westpac Group today welcomed the Australian Securities and Investments Commission’s (ASIC) Unfair contract terms and small business loans report which highlights the progress being made by the major banks in making contracts even more favourable for small business customers.
Westpac has been implementing a range of changes over the past 18 months to make its business loan agreements clearer and more transparent for business customers, in consultation with the Australian Securities & Investments Commission (ASIC) and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
As noted during the Carnell Inquiry, Westpac took initiative in leading the elimination of certain non-monetary covenants for small business loans up to $1 million. Westpac has also supported the removal of financial indicator covenants such as loan to valuation ratios in loan contracts for total borrower group credit exposures up to $3 million.
David Lindberg, Chief Executive of the Business Bank, said Westpac will continue to uphold its high standards to deliver good outcomes for customers.
“First and foremost, business customers expect straightforward contracts and professional guidance from a banker that understands their business needs. Today, we have made a number of positive changes to our products and services to support making contracts simpler across Westpac.” Mr Lindberg said.
Some of the changes made to small business lending contracts include:
- Introducing shortened, plain English loan agreements for a selection of core lending products using language that is much easier to understand for customers for loans where the borrower group’s total exposure to the bank is up to $3 million.
- Strengthening customer protections under business contracts to make them more favourable for small business customers who have entered into, renewed or varied business finance contracts and equipment finance contracts of up to $1,000,000 since 12 November 2016.
- Piloting electronic delivery and signing for a selection of core lending products. Business customers with total group exposure up to $3 million can receive, upload and sign their loan documents online, removing the need for manual processing, and speeding up the time to settlement.
Westpac is committed to making continued further changes that support small businesses and will continue to work with its peers, regulators and the industry to improve the banking process and experience for customers.