Regulation  

What the regulators must do now

Paul Grainger

Paul Grainger

It has set out its expectations of lenders and mortgage providers taking part in the CBILS scheme indicating what measures they expect such firms to take, for example, in granting payment holidays and not imposing additional charges.

Similar guidance was issued for the motor finance sector and high cost credit.

Dear CEO letter

The FCA issued a “Dear CEO” letter to banks and similar lenders on 15 April setting out its expectation fair lending to small businesses.

It sets out that FCA will be sympathetic to banks adopting less prudent lending standards in the current circumstances where this is to expedite lending to small businesses.

However, this does not go far enough. At the time of writing only around 2 per cent of CBILS loans have been approved.

The FCA must be asking why and identify what the problem is.

If it is due to bureaucracy, then FCA in conjunction with the Bank of England must be directive about simplifying the lending process (as has happened in Switzerland).

If it is a reluctance to lend because only 80 per cent of the loan is guaranteed by the government, then the FCA and the Bank of England should liaise with HM Treasury and  press for a 100 per cent loan guarantee and/or simplified affordability assessment so as to streamline the loan assessment process as offered in many other European countries.

The key is to get cash into the hands of small business very rapidly.

Paul Grainger is chief executive of Complyport