Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if her Department will bring forward legislative proposals to ensure that SMEs are referred to the (a) most appropriate and (b) best value funding option under the Bank Referral Scheme.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Bank Referral Scheme is a legislative initiative that requires major lenders (designated banks) to refer SME customers that they reject for finance, with the SME’s permission, to designated finance platforms that can connect the SME with alternative finance providers.
The Scheme is designed so that once an SME has consented to referral, its details are shared with all designated finance platforms – there are currently three. Each designated finance platform is an online service that hosts a panel of lenders. Under the design of the Scheme, lenders decide whether to offer finance to an SME applying for finance and on what terms, and it is for the SME to decide whether it wishes to proceed if an offer is made. The SME could potentially be offered finance by more than one provider and would be free to choose the product best suited to its needs.
On 27th October, the Government launched a consultation and call for evidence on the Bank Referral Scheme, inviting views on a range of issues and proposals aimed at better facilitating SME access to finance through the Scheme. Depending on feedback, the Government will consider whether the existing legislative framework needs to be amended. The consultation is available here and will close on 22nd December: https://www.gov.uk/government/consultations/bank-referral-scheme-consultation-and-call-for-evidence
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will require banks to submit quarterly data on the number of small and medium sized business account (a) openings and (b) closures.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Government recognises the vital role financial services play in supporting millions of businesses across the UK, and believes all customers should be treated fairly by banks and have access to the financial services they need.
This is why the Government introduced new rules earlier this year to require banks to give customers 90 days' notice before closing accounts and provide a clear explanation. The Government’s new rules will ensure more transparent and predictable access to banking, while still recognising that it is a commercial decision for a provider as to whom they provide services for.
More widely, the Financial Conduct Authority (FCA) monitors banks regarding account openings and closures and has published reports looking at debanking. Beyond this, the Treasury has no plans to require banks to submit further information in this area.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 16 October 2025 to Question 81241 on Credit Unions: Mortgages, what information her Department holds on which credit unions offer mortgages in each (a) region and (b) UK nation.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
There are six credit unions in the UK currently offering mortgages.
Of these, two are headquartered in England, three in Scotland, and one in Northern Ireland.
Of those headquartered in England, one is located in the North West and one is located in London.
Depending on the credit union in question’s common bond type, these credit unions may serve members outside of their headquartered regions.
Credit union policy is devolved to Northern Ireland, and so legislation may differ.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will encourage partnerships between (a) Barclays Bank, (b) Santander, (c) HSBC, (d) NatWest and (e) Lloyds Bank with community development finance institutions serving areas of highest deprivation.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Government recognises the vital role Community Development Finance Institutions play in providing affordable credit to underserved consumers and businesses. To support this, in November 2024, the British Business Bank launched the Community ENABLE Funding (CEF) Programme, which aims to deploy £150 million over the next two years to ‘not for profit’ lenders, including CDFIs.
This will enable these organisations to provide enhanced support to consumers and businesses by broadening access to finance. In 2024, CDFIs and social banks lent £96.7 million to 364 social enterprises, with 67% of this lending directed to the UK’s most disadvantaged areas.
In July, my predecessor co-chaired a roundtable in July with Responsible Finance which was an important opportunity to discuss how banks and CDFIs can work together to improve access to affordable credit.
Several banks have already shown tangible support for CDFIs. For example, in 2023 NatWest provided £900,000 to the sector, with half distributed directly to households to help meet immediate needs during the cost-of-living crisis, and the remainder used to strengthen the sector’s capacity for future support. Similarly, Lloyds was announced as the lead investor in a new £62 million Community Investment Enterprise Fund, designed to help small businesses across England and Wales access finance through CDFIs, supporting local jobs and economic activity.
Furthermore, in recognition of the important role responsible credit can play for consumers, the Government’s forthcoming Financial Inclusion Strategy includes a focus on access to credit, among other priority issues, and will seek to ensure people have access to useful products and services for their needs.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, when she plans to publish the responses to the call for evidence entitled Credit Union Common Bond Reform, published on 14 November 2024.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The government recognises the role that credit unions play in providing savings and affordable loans to their members, serving local communities throughout the country. This is why the government is taking steps to ensure credit unions are fully supported to grow and scale into the future.
This includes exploring legislative reform to the credit union common bond, to ensure it remains fit for purpose. We launched a call for evidence at last year’s Mansion House on the potential reform, which closed in March this year.
Responses to the call for evidence are being carefully considered and the government will provide an update on this work in due course.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many complaints (a) her Department, (b) the Financial Conduct Authority, (c) the Prudential Regulation Authority and (d) the Financial Ombudsman Scheme have received on high cost business lenders who have offered loans with interest rates payable of more than 40%.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Treasury receives correspondence across a wide variety of subjects including financial services. While we are not able to measure the number of complaints the department receives in relation to high-cost credit for business loans with interest rates payable of more than 40%, the volume of correspondence on the cost of credit in relation to business loans is generally low.
The Financial Ombudsman Service (FOS) publishes annual and quarterly insights into which areas are attracting most complaints. In its last quarterly publication, it noted that complaints about unaffordable lending had halved. That data-point does not, however, distinguish between household and commercial credit and the areas of topical complaints may change quarter on quarter. In the last five years, credit card related complaints to the FOS have been one of the top five areas of complaints, but business lending specifically is not a significant source of FOS disputes in comparison to household and personal credit.
The Bank of England’s ‘bankstats’ data provides insights into business and household credit, including the effective interest rates for SMEs on new and outstanding loans. The monthly average of UK resident banks’ sterling weighted loans for new advances to SMEs now stands at 6.35%, as of 31st August 2025, a figure that has tracked down as the base rate has fallen.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will require the Bank of England or Prudential Regulation Authority to monitor personal lending and lending to businesses in left behind communities.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Government welcomes the work of the Bank of England to assess and monitor credit provision in the UK for households and businesses, through its bankstats releases and regular business surveys. The Government has no further plans in this area.
The Government is, however, committed to ensuring that access to finance is available across the UK and to tackle barriers where these exist. In recognition of this, in November 2024, the British Business Bank launched the Community ENABLE Funding (CEF) Programme, which aims to deploy £150 million over the next two years to ‘not for profit’ lenders, including Community Development Finance Institutions (CDFIs). In 2024, CDFIs and social banks lent £96.7 million to 364 social enterprises, with 67% of this lending directed to the UK’s most disadvantaged areas.
Furthermore, in recognition of the important role responsible credit can play for consumers, the Government’s forthcoming Financial Inclusion Strategy includes a focus on access to credit, among other priority issues, and will seek to ensure people have access to useful products and services for their needs.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has had discussions with the Prudential Regulation Authority on the potential merits of a central finance facility for credit unions.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Government has made clear its strong support for the credit union sector, recognising the value that credit unions bring to their members in local communities across the country in providing savings products and affordable credit.
HM Treasury is delivering on measures announced by the Chancellor in last year’s Mansion House speech, including: concluding a call for evidence on potential reforms to credit union common bonds, supporting the industry-led Mutual and Co-operative Sector Business Council, and commissioning the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to publish a report on the mutuals landscape by the end of 2025.
The Government currently has no plans to develop a central finance facility for credit unions but continues to engage with the sector and the regulators, and will keep all issues, like central finance functions, under review.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will provide the Financial Ombudsman Service with additional powers to monitor the use of personal guarantees by financial services companies for lending to small and medium sized businesses.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Financial Ombudsman Service (FOS) was set up to resolve complaints between consumers and small businesses, and their financial services providers. While the Treasury sets the legal framework in which the FOS operates, the rules on how the FOS should handle complaints, including the jurisdiction of the FOS and what complaints it can deal with, are determined by the Financial Conduct Authority (FCA) and set out in the FCA Handbook.
As set out in the government’s small business strategy, which my Honourable Friend contributed so much to, we are committed to working with lenders on the appropriate use of personal guarantees. This includes a mandatory Code of Conduct for accredited lenders that use the British Business Bank’s Growth Guarantee Scheme to ensure the use of personal guarantees under the Scheme is fair and transparent.
Recognising the necessary role that personal guarantees play in business lending, the government will work with UK Finance to build on their existing lender commitments to use personal guarantees responsibly, and with the business finance community as a whole to build businesses’ understanding of how to access the right finance on the right terms to meet their needs and to help businesses better understand the role of personal guarantees.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of trends in the level of bank lending to (a) individuals and (b) businesses in the key areas reviewed by the Independent Commission for Neighbourhoods.
Answered by Lucy Rigby - Economic Secretary (HM Treasury)
The Government recognises that credit, when provided responsibly, supports business growth, and can be crucial for people facing unexpected expenses or managing their cash flow.
The UK has a diverse landscape for credit provision to individuals and businesses, comprising traditional banks, challenger and specialist banks, and non-bank finance providers.
As part of this landscape, Community Development Finance Institutions (CDFIs) play a vital role in providing affordable credit to underserved consumers and businesses. In November 2024, the British Business Bank launched the Community ENABLE Funding (CEF) Programme, which aims to deploy £150 million over the next two years to ‘not for profit’ lenders, including CDFIs. This will enable these organisations to provide enhanced support to consumers and businesses by broadening access to finance. In 2024, CDFIs and social banks lent £96.7 million to 364 social enterprises, with 67% of this lending directed to the UK’s most disadvantaged areas.
Furthermore, in recognition of the important role responsible credit can play for consumers, the Government’s forthcoming Financial Inclusion Strategy includes a focus on access to credit, among other priority issues, and will seek to ensure people have access to useful products and services for their needs.