The Australian Securities and Investments Commission (ASIC) has positioned itself as a sheriff for small businesses in its new corporate plan, pledging to crack down on unfair contract terms and dodgy deals offered by big business partners and financiers.
In its fresh outlook for 2023-2027, released on Monday, ASIC pledged it would ramp up its enforcement action against businesses taking advantage of smaller operators.
“Protecting consumers and small businesses from misconduct and taking decisive action against those who break the law is central to ASIC’s work to maintain confidence in Australia’s markets and support the economy,” said ASIC chair Joe Longo.
The past year has been “challenging” for vulnerable consumers and small businesses, the new corporate plan notes, reflecting the “impact of high inflation and rising interest rates is felt across the economy”.
“Against this backdrop, we will sharpen our focus on predatory lending practices and non-compliance with new consumer protections relating to small amount credit contracts and consumer leases,” it said.
“We will also take action against conduct that unfairly impacts small businesses, including in relation to unfair contract terms and supply of unsuitable products.”
The crackdown on unfair contract terms follows the introduction of legislation outlawing clauses that unduly restrict the bargaining power and flexibility of small businesses.
Those rules drastically increased the maximum penalties faced by businesses accused of enforcing unfair contracts and expanded the pool of small businesses that could rail against those terms.
The shift is also backdropped by the government’s consideration of an outright ban on unfair trading practices not already covered by the new laws.
Separately, an explosion in both bank and non-bank lending to the small business sector appears to have caught ASIC’s attention, which says it is on the lookout for predatory lending practices.
ASIC used the news to flex its muscles, claiming it has commenced over 125 criminal actions in the three years to June 2023, resulting in 92 convictions and 39 custodial sentences.
It launched even more civil claims, with the watchdog claiming to have secured more than $500 million in both criminal and civil penalties from the courts over that period.
“Protecting consumers and small businesses from misconduct and taking decisive action against those who break the law is central to ASIC’s work to maintain confidence in Australia’s markets and support the economy,” said Longo.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
Comments