Small-business owners are drowning in unnecessary and overcomplicated paperwork, say experts, and it’s hitting brokers harder than most.
Brokers are no strangers to compliance burdens, but it’s not only NCCP that’s creating a mountain of red tape. Amy Rosenfeld investigates the compliance requirements that brokers face as businesspeople in 2013.
Small-business owners are drowning in unnecessary and overcomplicated paperwork, say experts, and it’s hitting brokers harder than most.
Peter Strong, president of the Council of Small Business of Australia (COSBOA), says the financial services sector struggles with a “stupid” amount of regulations, compounded by the fact that a large number of mortgage businesses are sole proprietors.
“We’re talking about pressure on an individual. We’re people first in small business; we’re not businesses that then maybe are people. It’s nearly always one person or a couple who own the business so they’ve got all this pressure on them.”
According to a recent report released by the Productivity Commission, small businesses account for 95% of the country’s enterprises and represent over 40% of the public sector workforce.
The fact that small businesses spend an average of five hours per week on compliance and regulation is therefore a serious concern for the country’s productivity, the commission found.
“Small businesses feel the burden of regulation more strongly than other businesses,’’ their report said.
"A small business is not just a big business on a smaller scale but one that operates in a fundamentally different way, and may lack the time, knowledge and often motivation to distil the relevant compliance requirements.”
SUPER TROUBLES
Superannuation requirements are particularly burdensome for small-business owners, Strong says.
In his recently recorded tongue-in-cheek music video, Red Tape Nation, which Strong created to raise awareness of the plight of small businesses, he rhymes: “Now I’m a slave for the whole nation, collecting all their superannuation, and nobody seems to give a damn the collection process is one big scam.”
Between fringe benefits tax, PAYG (pay as you go), occupational health and safety and many other compliance requirements, brokers are consistently losing the battle to maintain a worklife balance, Strong says.
“We just want, like everybody else, our weekends back, our Sunday mornings, our evenings. We’d like to spend a bit more time with the kids or walking the dog, but at the moment, because of a lack of understanding that we’re people but we happen to own businesses, we lose the ability to have that time to ourselves.”
MFAA CEO Phil Naylor says the Fair Work regulations, in particular, are not conducive to the flexible way in which small businesses, and especially brokers, operate.
“I think the key point about small business regulation is that, while there are a myriad of regulations that they must be aware of (just as there are for big business), in the case of small business it is usually one person – the owner – who has to keep on top of all that, as well as carrying out their main function, in our industry’s case, as a broker. Brokers don’t have the luxury of having a team of experts on tap to ensure all the various regulatory obligations are adhered to.”
NO QUICK FIX
According to a recent report to the Treasury, BAS (business activity statement) compliance is considered the most burdensome of all compliance obligations, taking an average of 2.1 hours per quarter to complete for small businesses. But the report emphasises that concerns over tax compliance do not stem from one single aspect of the system.
“Rather, changes to, and the accumulation of, regulation at all levels of government appear to be the problem,” the report says. “Consequently, there is no simple ‘quick fix’, and improvements are only likely to be achieved through concerted effort by governments across jurisdictions.”
In recent years there has been an improvement in the efforts of regulatory authorities to understand small business, says Strong, with a number of government departments opening small-business divisions.
“So, instead of just being piecemeal, they’re looking at it from a holistic point of view. You can see that the people in power get it and they’re trying to change those attitudes.”
Despite certain “areas of concern” about levels of documentation, FBAA president Peter White says brokers are in a much better place compliance-wise than they were prior to the introduction of NCCP.
“Responsibilities for responsible lending conduct are far more stringent, which is a good thing. Disclosure is far more extensive and transparent, but we still need to mature in this new environment as it is still evolving and developing and we are, in some areas, still getting used to it.”
The high level of paperwork imposed on brokers, however, needs rationalisation, says White.
“It is an enormous impost on the broker’s time, which costs money, and borrowers rarely read every piece of paper they get (including T&Cs of loan contracts and mortgages, etc.), so there needs to be a review on such things.”
But White stresses that the onus comes back to brokers to ensure they are keeping up with their responsibilities.
“Don’t be complacent. Your obligations are well documented under the regulations for NCCP, and you must comply; if you don’t, you will get caught out. Read the regulations and seek independent advice from people who know what they’re talking about.”
HELP AT HAND
White also warns brokers about overcomplicating regulations or communications from regulatory bodies, and suggests brokers “respectfully dumb it down”.
“Look at the subject matter, read what is expanded upon, and then apply that to how a brokerage business operates. It won’t answer all your questions but it normally helps you understand what is being said.”
Various helplines, such as the recently improved facilities offered by the ATO, are a wealth of information for small-business owners, says Strong.
He also suggests brokers join an association that has the facilities to aid them in the compliance process.
“Every regulator I talk to says they have fewer problems with businesses who are members of an association than they do with anyone that’s not a member.
“They know how to communicate with people in the industry, what language to use, the problems they face. There’s no such thing as ‘small business’; that’s a description of an economic unit. What there are are truck drivers, doctors, mortgage brokers… We’re people and we communicate differently for different groups, so you need to find someone who understands you.”
