Small business lending startup Prospa has delayed its ASX listing as it seeks to clarify questions raised by the Australian Securities and Investments Commission (ASIC) yesterday around its loan terms.
The fintech, founded by Beau Bertoli and Greg Mosohl, was expected to list at midday today after raising $146 million through the issuing of 40.3 million shares at $3.64 a share. As detailed in its prospectus, the company has lent over $500 million to more than 12,000 unique customers since launch in 2012.
According to a statement from the company, the listing is expected to be postponed for approximately 48 hours as Prospa prepares its reponses.
Prospa stated that the queries were raised “in the context of an industry-wide review into financial services small business loan terms”.
ASIC was last week questioned at the banking royal commission for not taking strong action against banks who were not compliant with unfair contract legislation put in place in 2015.
A report released by ASIC and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) released in March found the four major banks had not taken the necessary steps to comply.
Ombudsman Kate Carnell pointed out, “This was after a generous one year transition period to meet the November 2016 implementation deadline.”
Small business groups have been pushing for simpler contracts to ensure small business owners are fully aware of what they are signing; contracts have often been too long and complex, written in legal jargon, the ASBFEO stated.
“Often small businesses do not understand the significance of what they are signing,” Carnell said.
Looking at the fintech space, the ASBFEO in March partnered with FinTech Australia and theBankDoctor.org to release a report analysing the approaches to disclosure across the industry and making recommendations on best practice moving forward.
The report identified six key pillars on which to focus industry self-regulation and action, including industry support and action to comply with Unfair Contract Terms legislation; industry support of internal and external dispute resolution services; and industry advocacy and cooperation with governments to develop policy measures to support and promote.
Prospa had previously stated in its prospectus that it had reviewed its loan contract in relation to unfair contract terms in July 2015, and September 2017.
“We will continue to review our loan contract as and when required in light of relevant case law and regulatory guides that may be issued,” the company stated.
Image: Beau Bertoli and Greg Mosohl. Source. Supplied.