Banks: Small and Medium-sized Enterprises

Lord Sharkey Excerpts

Wednesday 12th March 2014 Lords Chamber

Asked by

[Lord Sharkey]

To ask Her Majesty’s Government what steps they are taking to encourage banks to refer small and medium-sized enterprises which apply unsuccessfully for credit to other sources of credit.

[Lord Popat (Con)]

My Lords, banks are focal points for small businesses seeking finance and the Government want to see them do more in response to client applications. In December 2013, we published Small Business: GREAT Ambition, in which we committed to work with the banks and the BBA to improve the referral by the end of this year. The Government are determined to make real progress on this matter and are considering all possible options.

--- Later in debate ---

[Lord Sharkey (LD)]

Only yesterday the OFT raised a concern that the big banks were hindering access to alternative forms of financing such as peer-to-peer lending. For existing and new referral schemes, we need to know exactly what the banks are up to and what they are doing. Can the Minister assure the House that all referral schemes will require the banks to publish meaningful data, as they do now for lending?

[Lord Popat]

The noble Lord makes an important point and I pay tribute to the work he has done on driving greater transparency in local lending. An effective referral system needs to be transparent to build trust among businesses and alternative finance providers. I welcome the recent comments made to the Treasury Select Committee by the independent external reviewer of the banking appeals process, Professor Russel Griggs. He agreed that more could usefully be done to integrate banks in terms of the outcome of referrals and on signposting processes.