Labor pitches free legal advice service for small business
Labor has committed to establish a free legal advice service for small businesses and farmers in dispute with financial service providers.
Announced by Labor’s shadow treasurer Chris Bowen, the party has pledged $10 million per year in funding to the service.
The service is planned to cost $40 million over four years, with the funding said to come from Labor's Banking Fairness Fund.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, welcomed Labor's announcement on Wednesday.
"Through this initiative, small businesses and farmers would get free legal advice as soon as a dispute arises," Ms Carnell said.
The service envisions continued legal advice for small businesses, if the dispute is escalated to the Australian Financial Complaints Authority (AFCA) or is taken to court.
"Small businesses and farmers would also be able to call on this advice to prepare for past cases to be considered by AFCA under its extended remit – to consider eligible financial complaints from small businesses dating back to 1 January 2008," Ms Carnell said.
"We support measures that ensure small businesses have access to justice, particularly in cases where there's an imbalance of bargaining power."
She explained that phase one of the ASBFEO'S access to justice inquiry found that three out of five small business owners sought legal advice from a lawyer.
"Even with legal advice, small businesses find the cost of any action to achieve justice outweighs the potential gain. The proposed initiative would have the ability to actually fund cases, which is a real step to achieving justice for small businesses and farmers with valid cases against their financial service providers," Ms Carnell concluded.
Businesses already have access to a complaint resolution process through AFCA. Earlier this year, the government said it is extending AFCA’s remit to review eligible financial complaints dating back to 1 January 2008.