Government reviews banks’ lending
The Government has set up a forum to monitor how the five major high–street banks lend to small firms, amid concerns that they are cutting back on lending.
Chaired by Business Secretary Peter Mandelson, the Small Business Finance Forum held its first meeting on 11 November, and included representatives from banks and small business groups, as well as a panel of government officials. The panel is aiming to establish the availability, risk and overall cost of lending. Lord Mandelson said:
“It’s critical we understand what finance is available for small businesses. The Government’s monitoring panel will give us greater insight into the situation at ground level.”
The panel is made up of senior officials from the Department for Business, Enterprise and Regulatory Reform (BERR), HM Treasury and the Bank of England.
It will communicate with HSBC, Barclays, Lloyds TSB, Royal Bank of Scotland and Halifax Bank of Scotland. BERR spokeswoman Sarah Davies said:
“The forum is there to find a solution to any communication problems between banks and their customers. The point of the forum is that banks and businesses will have chance to discuss their issues — they will be responsible for the actions and resolutions decided there.”
“The data the panel obtains will help ministers see where the problems are so they can decide how to deal with them,” she added.
At the same meeting, an agreement was made with the British Bankers’ Association (BBA) to change the ‘statement of principles’ which determine the way banks and businesses work together.
The BBA set out ten promises, including that banks will maintain and promote competitively–priced lending and that they will communicate with businesses in. BBA chief executive Angela Knight said:
“Businesses with good ideas need to be reassured that banks are listening and are working actively with them. Armed with these promises, Britain’s entrepreneurs can speak frankly with their banks about their needs and the challenges they face.”
The Government panel’s findings are due to be discussed at next month’s meeting of the Small Business Finance Forum.
For more information about the BBA’s ten promises, visit the BBA website