Small Business Ombudsman Kate Carnell has questioned the sincerity of a pledge by the banks to clean up their act, saying their actions thus far did not match their "slick PR campaign".
As Coalition MP George Christensen renewed his threat to cross the floor to support a royal commission, Ms Carnell said the bank bosses would be pushed on the small business issue in March when they are next grilled by a parliamentary committee.
She was also referring the matter to the Australian Securities and Investments Commission.
Bank bosses have been around Parliament this week lobbying ahead of the March hearings.
Westpac chief executive Bran Hartzer held meetings with ministers and shadow ministers on Wednesday and Australian Bankers' Association Steven Münchenberg has spent two days in the capital. On Thursday he met Mr Christensen.
Last week, the findings of an inquiry Ms Carnell conducted into the way banks treat small business was handed down. Ms Carnell said despite assurances to the contrary, there was an "unwillingness of the banks to abide by new laws governing unfair terms in standard form contracts with small businesses".
'Changes around the edges'
Last year, legislation was enacted to outlaw unfair and one-sided standard form contract terms. The banks were required to create contracts that could first and foremost be easily understood, and secondly, be fair for small business customers, Ms Carnell said.
"What we found through our inquiry process was that the banks did pretty much the opposite and only made minor changes around the edges," she said.
"For example, one bank changed their terms and conditions from 'requiring customers to do anything the bank asks', to 'doing anything the bank "reasonably" asks'. This is hardly enough to make an unfair contract fair."
Ms Carnell questioned the campaign the banks launched last week saying they'd heard the message from customers and had changed their ways.
"If their collective response to the unfair contract terms legislation is anything to go by, I question whether their claims have any substance, or whether it is just a slick PR campaign."
MP's vow to cross floor
Mr Christensen said that if a private members bill calling for a royal commission was put up for debate in the House of Representatives, he would cross the floor to support it. Given the finely balanced numbers in the House, it would most likely pass. While this would be embarrassing for the government, it would not be bound to establish a royal commission.
Moreover, the government controls which bills come on for debate in the House so there is next to no prospect of a private members bill ever being put to the vote.
Mr Christensen said he would not vote to support a motion calling for a commission because motions were symbolic and ultimately meaningless.
Labor leader Bill Shorten, who has been calling for a royal commission for a year, said he accepted the prospect of a royal commission was dead unless Labor won government.
"There is a number of backbenchers in the Coalition who would love to vote for a royal commission but Malcolm Turnbull's representing the banks in Canberra, so that puts the kybosh on it until we change the government," he said.This article was first published by www.afr.com
Author: Phillip Coorey