State puts the case for EFT protection for small business

The Australian Securities and Investments Commission (ASIC) is being urged by the Western Australian Government to extend the Electronic Funds Transfer (EFT) Code to protect small business operators.

Commerce Minister Troy Buswell said a majority of small businesses used the internet and electronic banking systems as part of their business banking requirements and should be protected from fraud and other misconduct in the same way as private consumers.

A submission arguing the case had been filed with ASIC by the Small Business Development Corporation (SBDC) in response to a consultation paper entitled 'Review of the Electronic Funds Transfer Code of Conduct 2007/08'.

The SBDC surveyed its Ready Response Network to gauge the small business experience with respect to electronic banking.  The results confirmed that 95 per cent of respondents used electronic banking for business purposes.

A total of 10 per cent reported being the victims of credit card fraud and 16 per cent experienced problems with mistaken payments.

"Denying protection to small business through the EFT Code is incongruent with the Code of Banking Practice which does extend protection to the use of banking systems by small businesses," Mr Buswell said.

"It would make good sense for the EFT Code to also include small business operators, particularly given that many combine their private and business bank accounts."

The Minister said any proposed modification of the existing no-fault liability should also be mindful of the relatively low financial and human resource capabilities of small business.

"A no-fault liability amount should be set at a maximum of five per cent of the amount in dispute and a review mechanism included to ensure it reflects current economic conditions and does not operate as a further impost on small business capability," he said.

Minister's office  - 9222 9111