AFCA Alerts SMEs to Risks of Unregulated Lenders Amid Complaint Surge

The Importance of Verifying Lender Credentials for Small Business Loans

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Australian Financial Complaints Authority (AFCA) has issued a warning to small businesses regarding the risks associated with unregulated lenders.

This comes in response to a notable increase in complaints that AFCA cannot address due to the lenders' lack of membership in the authority.

In the last financial year, AFCA received a record 4,648 small business complaints, with 2,063 related to finance. However, 21% of these finance-related complaints were closed because the lenders were not AFCA members, leaving business owners without recourse through the authority.

AFCA's lead ombudsman for small business, Suanne Russell, highlighted the growing concern over this trend, emphasizing the importance for SMEs to verify a lender's membership status before securing finance. Businesses can check a lender's membership through AFCA's online resources.

For small business owners, this serves as a crucial reminder to conduct thorough due diligence when seeking financing. Ensuring that a lender is regulated and a member of AFCA can provide a layer of protection and access to dispute resolution services if issues arise.

Published:Wednesday, 19th Nov 2025
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

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This website is owned and operated by Clark Family Pty Ltd (ACN 010 281 008) as Trustee for the Clark Family Trust (ABN 35 957 893 714), 43 Larch Street Tallebudgera QLD 4228. Small Business Finance publishes general information, tools and resources about business loans and related finance topics for Australian small businesses.

IMPORTANT: This website provides general information, tools and resources and does not take into account your objectives, financial situation or needs. We do not provide personalised financial advice or credit assistance, accept finance or insurance applications or quote requests, or refer visitors to brokers, lenders or insurers. We do not select, recommend or arrange products or providers for you. Consider seeking advice from a suitably qualified adviser before acting on the information. You should independently verify the credentials and licensing of any adviser or provider you engage. Visit the ASIC website for further information.