A recent report from the Treasury Committee has raised concerns about damaging financial regulations and inadequate support from banks, hindering the growth and innovation of small businesses in the UK.
The report focuses on access to banking services for smaller firms, highlighting issues such as unfair debanking practices and substandard dispute resolution processes between SMEs and banks.
Go deeper with GlobalData
MPs on the Committee have condemned the debanking of legitimate businesses, particularly in sectors deemed ‘undesirable’ by banks, such as defence, pawnbroking, and amusement machines. They argue that any small business engaged in legitimate activities should have access to banking services.
Evidence presented during the inquiry revealed that over 140,000 small businesses were debanked in the last year, often with little notice. Many closures were attributed to vague reasons like ‘risk appetite’ without clear definitions.
The Committee is calling on the Financial Conduct Authority (FCA) to enforce transparency from banks regarding debanking decisions, urging them to provide quarterly reports on closed accounts and reasons for closure.
Furthermore, concerns were raised about the efficacy of the Business Banking Resolution Service (BBRS), an industry-funded not-for-profit resolution service, which has settled only 58 cases while costing over £40 million to operate. The Committee recommends its closure and the establishment of a new, independent system to address grievances from small businesses.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataPlans to introduce Basel 3.1 reforms were also scrutinised, with MPs warning that strict lending requirements could hinder the international competitiveness of British SMEs.
