Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps are being taken to support small businesses changing finance providers.

The Government is committed to ensuring the UK has a highly competitive and diverse banking sector, working in the interests of all consumers and businesses across the country. It is important that businesses shop around for their banking needs as this drives competition, improves choice and helps keep prices fair. There are a number of policies that help facilitate this:

Small businesses with fewer than 50 employees and an annual turnover of less than £6.5m are already able to use the current account switch service – designed to make it easier to shop around for their business current account.

The Commercial Credit Data Sharing scheme requires the UK’s largest banks to share credit information on small and medium sized enterprises (SMEs) with other lenders through designated Credit Reference Agencies. This has helped lower the barriers to entry for new finance providers and improved credit scoring in the SME finance market, giving small businesses more choice when applying for finance. The Government will consult on enhancing the scheme later this year to ensure it continues to keep pace with market changes.

The Government has also committed to consult on improving the Bank Referral Scheme. The scheme requires designated banks to refer SME business customers that they reject for finance, to platforms that can match the SME with alternative finance providers.

The British Business Bank’s Finance Hub also provides independent and impartial information on different finance options for scale-up, high growth, and potential high growth businesses, as well as resources that support SMEs to innovate and become more sustainable

Finally, in December 2024 the Secretary of State for Business and Trade also announced a new Business Growth Service (BGS) which will make it easier and quicker for businesses across the UK to get the help, support and advice they need to grow and thrive.