Small-business victims of banking misconduct will have access to a free legal advice service to help them pursue justice if Labor wins the upcoming federal election.
Announced today by Labor’s treasury and small business spokesperson Chris Bowen, Labor says it will commit $10 million per year in ongoing funding to the service, totalling $40 million over four years.
The service would provide free legal advice to small businesses and farmers via telephone and would also be able to assist with ongoing court and Australian Financial Complaints Authority (AFCA) cases.
The funding will be sourced from Labor’s $640 million Banking Fairness Fund, which would be paid for by the banks, meaning the subjects of many small-business complaints could be paying for the legal advice.
“Small businesses and farmers have been crying out for legal help for years. They have faced scandal after scandal at the hands of banks and financial service providers,” Bowen said in a statement circulated on Monday.
“When farmers and small businesses are driven into financial difficulty because of bank misconduct, they can’t afford to pay for private legal representation. Too often they’re forced to go to Court unrepresented.”
Small business ombudsman Kate Carnell said the policy would be a “real step” to achieving justice for small-business victims of banking misconduct.
“We support measures that ensure small businesses have access to justice, particularly in cases where there’s an imbalance of bargaining power,” she said in a statement circulated on Wednesday.
“The court system is expensive and is extremely time-consuming; money and time are two key things that small business owners don’t have.”
Businesses already have access to a complaint mechanism through AFCA, with a dedicated legacy complaint program offering up to $1 million in compensation for victims with cases dating back to 2008 from July 1.
Businesses with up to 100 employees and credit facilities of up to $5 million are covered by AFCA, which has so far been popular with SMEs, receiving an average of 400 complaints a month since opening late last year.
Labor has committed to doubling AFCA’s compensation cap to $2 million if elected next month through the fairness fund.