Six online SME lenders (fintechs) including Prospa, Spotcap, Capify, GetCapital, Moula and OnDeck, has signed on to a self-regulating commitment to improve the transparency of loans provided to SME borrowers.
The commit to disclosing all costs through a standard pricing comparison document, including annual percentage rates and total cost of credit (i.e. interest expenses and fees).
It will also require contracts drafted are compliant with all laws (innovative stuff). Lenders are under pressure to make contracts fairer for customers after the Hayne royal commission exposed many contracts as being complex and giving too much power to lenders.
Monitoring and enforcement is to be by the Australian Finance Industry Association.
No rush though as they are not expected to comply until the end of 2018 calendar year, but are to get sign off from an independent law firm. Hopefully not ‘independent’ as defined by the AMP board.