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The small business ombudsman has urged government to adopt regulatory technology to “reduce the burden on small businesses to interpret and implement complex regulations”.
Speaking before the Senate Select Committee on Financial and Regulatory Technology on Tuesday (14 July), the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, outlined that regulatory administration was costing small businesses an increasing amount of time and money.
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“Research shows us that a quarter of small businesses spend 11 hours a week or more on compliance, and close to half estimate the annual cost of compliance is $10,000 plus,” Ms Carnell said.
Ms Carnell suggested that government investment in regtech would be an effective way to cut red tape for small businesses and create an opportunity to make life easier for small businesses.
“Regtech uses information technology to simplify regulatory processes for the end user. It’s a potential game-changer for small businesses trying to navigate Australia’s complex regulatory system,” the ASBFEO explained.
“With effective use of regtech, the government could streamline processes and reduce the burden on small businesses to interpret and implement complex regulations,” she added.
The ombudsman made a number of recommendations in regards to key areas where regtech could be implemented, including award simplification, tax requirements, skills and training, government procurement and OH&S.
“This would be particularly useful in the industrial relations space where regtech solutions could ensure small businesses are paying wages and entitlements correctly and on time. We’ve recommended the Fair Work Ombudsman accredit regtech solutions for this purpose,” she said.
“In addition, government procurement would be optimised with digitisation. Regtech could provide small businesses with easier access to panels and demonstrate ongoing compliance. It could also simplify the tender process for small businesses.
“Ultimately, the government has an opportunity to modernise their systems now to reduce red tape so that small businesses can develop the skills and products Australia needs to remain globally competitive,” Ms Carnell said.
According to ASIC’s recent draft Cost Recovery Implementation Statement (CRIS) 2019-20, the financial services regulator will need to recover $10.1 million from credit intermediaries (entities that hold a credit licence authorising them to engage in credit activities other than as a credit provider, i.e. aggregators and mortgage and finance brokers) for the year 2019-20 alone.
Indeed, with the new best interests duty obligation coming into effect on 1 January 2021, the cost of compliance in the broking space, for example, is expected to increase.
However, many aggregators and brokerages are rolling out new systems and tools to enable brokers to manage their compliance more efficiently.
[Related: ASIC open to providing further BID guidance, if necessary]
