Ombudsman launches inquiry to investigate small business disputes beyond the court system

The small business ombudsman will launch an inquiry into dispute resolution processes for conflicts between smaller operators and big business and governments, saying the current system leaves SMEs in “no man’s land”.

Launching the inquiry this morning, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell explained the investigation would look to canvas where small businesses typically go when faced with a dispute, as well as key trends in dispute resolution given the small business community is faced with a costly and complicated court system when it comes to many issues.

On Friday, Carnell told SmartCompany a royal commission into the banking sector will hopefully highlight the power imbalance between the big banks and the small business community.

Power imbalances will also be a key focus on the ombudsman’s justice inquiry, with Carnell saying that for many small operators, the only choice to air grievances is to outlay significant costs by taking a bigger party to court.

“If there are two things that small business operators don’t have it’s time and money,” she said.

Dispute resolution has been in the spotlight in 2017, with state based business commissioners urging SMEs to come to them first with problems as a first port of call, while the federal government committed in the May budget to establishing a “one-stop shop” for dispute resolution, the Australian Financial Complaints Authority (AFCA). 

Carnell says AFCA is a good step, but it won’t be able to deal with non-financial disputes.

The lack of knowledge about how small businesses tend to approach dispute resolution has prompted Carnell to start research into the area by drawing on expert insights from legal experts and mediation services.

“Early next year we’ll survey small businesses and any business operator who’s interested will be able to participate,” she said. 

The ombudsman’s office is also interested in overseas models for dispute resolution: “If there are practical models elsewhere that work we’d like to evaluate them for potential application in Australia,” Carnell said.

A discussion paper from the inquiry will be released by mid-2018 to explain the research and make policy recommendations, and members of the public will be invited to comment on the paper.

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