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Class Action Firm Cautiously Welcomes Banking Sector Report

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Leading class action law firm Slater and Gordon has cautiously welcomed the release this week of a senate committee report into the post-GFC banking sector, saying it brings renewed attention to the concerns of small businesses dealing with banks.

Senior Slater and Gordon lawyer Van Moulis said the firm had been approached by a number of disgruntled ex-BankWest customers who have registered their interest in joining a class action against the bank and its parent company, the Commonwealth Bank of Australia.

“We are currently assessing what impact, if any, the report will have on that proposed action. However we note a number of recommendations that appear to have been made with those small business owners in mind,” Mr Moulis said.

“It is important to remember, however, that while the committee made a number of recommendations, it made no findings of fact.

“The committee emphasised that it was not a court of law and that questions of possible compensation were not for it to determine.”

The committee’s recommendations include:

  • An expanded role for the Financial Ombudsman Service (FOS)  to determine disputes from small business applicants with a maximum cap of $2 million for compensation; and
  • Retrospective jurisdiction for the FOS under the new caps to determine claims from 1 July 2008.

 “If implemented the Financial Ombudsman Service will be given retrospective jurisdiction over a period that corresponds with the complaints of many of the ex-BankWest customers who came to us,” Mr Moulis said. 

"It must, however, be noted that the recommendations of the Committee will disappoint many small business ex-BankWest customers with grievances and claims for compensation.

“The vast majority of complaints by ex-BankWest customers are much greater than the $2 million caps contemplated by the Committee."

The committee also recommended the Australian Bankers' Association develop a wider voluntary code of conduct for small business lending.

"Many were hoping for a recommendation regarding a stricter regulatory code that would include a mechanism for compensation, however, there was no such recommendation,” Mr Moulis said.

“Nevertheless, the Committee's work brings into sharper focus the concerns of small business enterprises in their dealings and treatment by banks."