AFCA's Lead Ombudsman for Small Business, Suanne Russell, emphasised the vulnerability of small business owners who deal with non-member lenders. Without AFCA membership, these lenders are not obligated to adhere to the same standards of conduct, leaving borrowers with limited avenues for dispute resolution. Russell highlighted the growing concern over the rise in complaints that AFCA cannot address due to this lack of membership.
In light of these developments, AFCA urges small business owners to exercise due diligence when selecting lenders. Ensuring that a lender is an AFCA member provides an added layer of protection, offering access to external dispute resolution mechanisms should issues arise. This is particularly crucial in the current economic climate, where small businesses face challenges such as cash flow constraints, rising operational costs, and fluctuating interest rates.
For small business owners seeking financing, it's advisable to:
- Verify the lender's AFCA membership status before entering into any agreements.
- Understand the terms and conditions of the loan thoroughly.
- Seek professional financial advice to assess the suitability of the loan for their business needs.
By taking these steps, small businesses can mitigate potential risks associated with unregulated lending and ensure they have the necessary support structures in place to address any future disputes.
