Member Article

Treasury to open SME lending inquiry

The Treasury will open a “short” inquiry into SME lending this week focusing on access to finance, introducing more competition in the sector and the treatment of businesses by banks.

The move followes recent evidence hearings from former Deputy Governor of the Bank of England, Sir Andrew Large; entrepreneur in residence for BIS, Laurence Tomlinson and the Financial Conduct Authority.

Chairman of the Treasury Select Committee, Andrew Tyrie MP, said: “SMEs report that they are struggling to secure adequate access to finance, from banks and elsewhere. It is vital to a sustainable economic recovery in the UK that this market be restored to working order.

“Regulatory and other impediments to competition need to be removed, enabling SMEs better to take advantage of new sources of finance. More competition can also drive up standards.

“Like individual customers, SMEs have been badly treated by their banks. The mis-selling of interest-rate swaps caused huge detriment. Although redress is currently being provided, many firms suffered significant losses.

“SMEs are viewed as sophisticated customers by regulators when, in reality, many are not. The Committee will look at whether the scope and remit of the regulators provide adequate protection.”

The inquiry will begin this Tuesday (February 25) with evidence from Professor Russel Griggs OBE, Independent External Reviewer of the Banking Taskforce Appeals Process, along with Priyen Patel, senior policy advisor for the Federation of Small Businesses and Matthew Fell, director of Competitive Markets at the Confederation of British Industry.

This was posted in Bdaily's Members' News section by Tom Keighley .