Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps the Government is taking to monitor the lending practices of banks.

Although the Treasury sets the legal framework for the regulation of financial services, it does not have investigative powers of its own.

The Financial Conduct Authority (FCA) is responsible for the regulation and monitoring of regulated mortgage and consumer lending. The FCA assesses every regulated firm’s fitness to trade as part of the authorisation process, including banks, and it has put in place binding standards on firms. It proactively monitors the market, focusing on the areas most likely to cause consumer harm, and it has various methods to punish breaches of its rules – there is no limit on the fines it can levy and, crucially, it can force firms to compensate consumers. In addition to following FCA rules, banks undertaking regulated consumer credit lending must also comply with relevant parts the Consumer Credit Act 1974.

On business lending, the Government continues to monitor the market and work closely with banks and other finance providers to ensure SMEs can access the finance they need, including through the government-backed loan guarantee schemes.

If, as a result of a bank’s lending practices, an individual or an SME feels they have been treated unfairly they can refer complaints to the Financial Ombudsman Service (FOS). The FOS provides a free, independent dispute resolution service for bank customers.