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Pottinger's independent review of the defiinition of "small business" under the Banking Code of Practice
The Banking Code of Practice (the Code) is the first substantive industry code to be approved by ASIC under the Corporations Act, and the Australian Banking Association (ABA) has sought and obtained approval for all subsequent changes to the Code. ASIC’s original approval of the Code was subject to the ABA agreeing to commission an independent review of the definition of "small business" in the Code within 18 months of the Code’s commencement. Accordingly, in September 2020, the ABA appointed Pottinger to conduct an independent review of the definition of "small business" under the Banking Code of Practice.
The Code is the Australian banking industry’s code of practice. It sets standards of good banking practice for banks to follow when dealing with their individual and small business customers and their guarantors. The latest version for the Code is known as the Banking Code of Practice (2019) and a link is provided to this document below.
The Code is applicable to individual and small business customers, as well as to their guarantors. Whether or not a business is covered by the provisions of the Code is determined by reference to the definition of ‘small business’ in the Code. Currently, the Code defines a business as a “small business” if, at the time that it obtains the banking service in question, all of the following apply:
It had an annual turnover of less than $10 million in its previous financial year; and
It has fewer than 100 full-time equivalent employees; and
It has less than $3 million total debt to all credit providers including any undrawn amounts under existing loans, any loan being applied for and the debt of all its related entities that are businesses.
Pottinger is publishing this questionnaire to enable any interested stakeholder to provide their perspectives on the review or some such.