It is unclear if a Senate inquiry into parts of the finance industry including payday lenders, buy-now-pay-later providers and debt management firms, announced last week will more broadly look at online or fintech lending groups.

The industry has, however, moved to self-regulate via a voluntary code of lending practice that was overseen by Fintech Australia. It includes a pledge to only lend to SMEs that have a capacity to repay.

But Mr Tyndall notes Marketlend will not sign the code and doesn't believe it goes far enough to address the underlying industry issues or provide a broad enough definition of small business loans on the market.

"The code claims to standardise transparency and create a mechanism to resolve disputes, but only six fintech companies have signed on and it has no real teeth," he said. "It's not clear whether the code can be enforced or is merely a set of guidelines. In other words, we're not signing up because it is not a legitimate attempt to enable responsible lending."

Marketlend is an online marketplace that provides trade credit by connecting borrowers and investors.

Numerous concerns

The Hayne royal commission delved into lending to small business uncovering concerns about remuneration structures in that part of banking and a lack of clarity around the advice being given to third-party guarantors, such as family members, on lending decisions.

The Reserve Bank of Australia has also stressed the importance of the sector noting that access to finance for small businesses was important because they generated employment, drove innovation and encouraged competition in markets. Small business employs about 5 million people.


"If you want the SME sector to continue to be a vibrant space you need to take a long-term view," Mr Tyndall said.

He believes part of the solution is ensuring regulation and transparency provide the adequate protections for small and medium businesses.

"ASIC [the Australian Securities and Investments Commission] are not being armed with the legislation … the struggle they have is they don't have the tools."

Part of what Mr Tyndall suggests is applying the National Credit Code for Retail to small and medium-sized businesses, meaning they would receive protections for loans of less than $100,000.

He has previously warned that the industry is still a Wild West, without "real oversight" to protect SMEs from predatory tactics.

Prior to starting Marketlend in 2014, Mr Tyndall a barrister, had stints as UniCredit's head of capital markets in Asia Pacific, a director at National Australia Bank and a securitisation manager at RAMS Home Loans.

Separately, several fintech lenders are also paying large upfront commissions to brokers that introduce customers to them. Prospa's prospectus, showed the company pays about 4 per cent in upfront commissions to brokers.

GetCapital is another non-bank lender to business that is said to offer brokers sizeable upfront commissions.