Gov­ern­ment un­der fire over lend­ing to SMEs

Western Mail - - BUSINESS -

THE chair­woman of the Trea­sury Com­mit­tee has crit­i­cised the UK Gov­ern­ment for “bury­ing its head in the sand” over pro­tect­ing small busi­nesses from be­ing ex­ploited and mis­treated by banks and other lenders.

The House of Com­mons Trea­sury Com­mit­tee in Oc­to­ber called on the Gov­ern­ment to cre­ate a fi­nan­cial ser­vices tri­bunal to pro­vide re­dress for small and medium-sized en­ter­prises (SMEs) from be­ing un­fairly treated by fi­nan­cial ser­vices firms.

In re­sponse to the com­mit­tee’s re­port, the Gov­ern­ment said it prefers an om­buds­man-style ap­proach rather than a tri­bunal as an om­buds­man ap­ply­ing a “fair and rea­son­able test” on the cir­cum­stances of a case is “more likely to lead to bet­ter out­comes for SMEs than a tri­bunal’s more le­gal­is­tic ap­proach”.

The Gov­ern­ment has there­fore backed the Fi­nan­cial Con­duct Au­thor­ity’s planned ex­pan­sion of the Fi­nan­cial Om­buds­man Ser­vice (FOS) to in­clude small busi­nesses and mi­croen­ter­prises, as well as the bank­ing in­dus­try’s com­mit­ment to cre­ate a vol­un­tary om­buds­man scheme to ad­dress com­plaints from SMEs which have an an­nual turnover of up to £10 mil­lion.

But Nicky Mor­gan MP, chair­woman of the Trea­sury Com­mit­tee, said there is cross-party sup­port to reg­u­late com­mer­cial lend­ing and that she is “dis­ap­pointed” that the Gov­ern­ment has re­fused to fol­low the com­mit­tee’s rec­om­men­da­tions.

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