Regulation  

TSC launches SME lending inquiry

The Treasury Select Committee has announced it will be conducting a “short inquiry” into lending from banks to small and medium sized enterprises, following reports they are struggling to obtain adequate finance.

The inquiry will focus on three issues: access to finance for SMEs, the scope for opening up the sector to more competition and the treatment of SMEs by banks.

The first evidence session will take place on Tuesday 25 February with details of further sessions to be announced in due course.

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This follows recent evidence sessions with Sir Andrew Large, a former deputy governor of the Bank of England; government adviser Laurence Tomlinson and the Financial Conduct Authority.

Andrew Tyrie, TSC chairman, said: “SMEs report that they are struggling to secure adequate access to finance, from banks and elsewhere. It is vital to a sustainable economic recovery in the UK that this market be restored to working order.

“Regulatory and other impediments to competition need to be removed, enabling SMEs better to take advantage of new sources of finance. More competition can also drive up standards.

“Like individual customers, SMEs have been badly treated by their banks. The mis-selling of interest-rate swaps caused huge detriment. Although redress is currently being provided, many firms suffered significant losses.

“SMEs are viewed as sophisticated customers by regulators when, in reality, many are not. The Committee will look at whether the scope and remit of the regulators provide adequate protection.”