Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps she is taking to ensure that SMEs (a) are not misled by banks (b) are not unfairly charged and (c) can access the financial services they need.

The Government recognises the vital role that financial services play in supporting millions of SMEs across the UK. We are committed to ensuring that SMEs are treated fairly by banks and have access to the financial services they need.

The provision of business banking services is largely a commercial matter, but there are certain regulatory and statutory protections afforded to SMEs. Notably, Consumer Credit Act protections apply to certain small businesses (sole traders, unincorporated bodies and two or three person partnerships). The FCA is able to investigate issues where this falls within their regulatory remit and the application of the Consumer Duty to micro-enterprises.

In addition, the Financial Ombudsman Service has jurisdiction over 99% of business banking disputes, providing a wide safety-net for businesses and an important avenue for redress if SMEs feel they have been misled, unfairly charged or mistreated.

Earlier this year, the Government also legislated to strengthen customer protection standards in cases where banks and other payment service providers close accounts or terminate services. As a result, under the new requirements, both personal and business customers will be given more notice of closures and will be entitled to a sufficient explanation for their provider’s actions.

More widely, the Government is committed to encouraging competition in financial services to help stimulate a strong and diverse market for SMEs and improve access to finance. While we continue to monitor issues relating to accessing financial services, service provision and charging models remain commercial matters for individual firms.