Parliamentary Treasury Committee to Investigate SME Finance Market

The Parliamentary Treasury Committee has launched an inquiry into the SME finance market.  The enquiry will look at competition in the market, the various sources of funding available to small businesses, including crowdfunding and peer-to-peer lending, and whether the current regulatory framework provides appropriate protection to SMEs when they borrow money, taking into account the lessons to be learned from RBS’ Global Restructuring Group (GRG).

This inquiry has been divided into a number of themes:

Funding options available to SMEs

  • The availability and uptake of different sources of funding for SMEs, including banks, peer-to-peer lenders and crowdfunding
  • The level of competition in the SME lending market and the impact of recent regulatory initiatives
  • Trends in SME finance and how potential changes to regulation and redress may affect the market
  • Any sources of finance which SMEs will not consider or approach and why

The ability of SMEs to resolve disputes and access fair and reasonable compensation when they borrow money

  • The effectiveness of existing arrangements for dispute arbitration and settlement
  • The merits of the Financial Conduct Authority’s proposals for expanding SME access to the Financial Ombudsman Service
  • The case for establishing a new “tribunal” body for settling SME banking disputes and the means by which such a body could be created
  • The design, governance and operation of such a tribunal body, and the potential relationship between it, the Financial Ombudsman Service, and the Financial Conduct Authority
  • The impact of additional avenues for redress on (i) the balance of power between SMEs and lenders; and (ii) the supply of, and demand for, credit

The regulation of SME lending

  • The level of protection currently afforded to SMEs when they borrow money
  • The case for bringing lending to SMEs within the regulatory perimeter, including (i) the likely impact on the supply of, and demand for, credit; and (ii) lessons learned from past misconduct
  • Other non-regulatory or quasi-regulatory options for policing SME lending, such as the establishment of industry codes and standards

You can keep up to date with developments on the committee’s website – click here.

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