By Jennifer Sieg
The Financial Conduct Authority (FCA) has today confirmed it will investigate the issues in lending practices that were previously raised by the Federation of Small Businesses (FSB).
The investigation follows asuper-complaint filed by the FSB in December, which said banks’ lending practices “excessively demand personal guarantees for business loans” and put a damper on business growth.
Sheldon Mills, executive director of Consumers and Competition at the FCA, said: “Small businesses are vital to the UK economy, and it is important that they can access lending to help them grow – so we welcome the FSB raising these issues.
“We will play our part to better understand whether lenders’ practices are causing unnecessary barriers to growth and, if necessary, act to remove any within our remit.”
Through a collection of data, review of policies, guidance and monitoring the complaints of the issue at hand, the investigation will share its findings with the “appropriate government departments.”
Mills said the FCA’s remit, which is set by Parliament, is “limited when it comes to small businesses”.
“If we identify issues outside our remit, we will make these public so that Parliament and policy makers can consider whether greater protection should be available to small businesses,” Mills added.
The super-complaint was part of what has been an ongoing battle to end “harsh” lending practices tosmall firms.
The FSB called on the FCA to review banking practices and consult with the Treasury to expand its regulatory perimeter to help more small businesses, particularly those where directors often provide personal guarantees.
