SME finance

Treasury begins SME finance inquiry

The Treasury committee has launched an inquiry into SME finance to look at the state of the market and the lessons to be learned from RBS's Global Restructuring Group (GRG).

Alongside the Treasury, the Business, Energy & Industrial Strategy (BEIS) committee will be starting a separate inquiry into government support for SMEs to boost productivity.

The BEIS inquiry will also assess whether enough is being done to protect businesses from unfair treatment by large companies.

The Treasury’s inquiry will look at the extent of competition in the market, the various sources of funding available to SMEs – including P2P lending and crowdfunding – and whether the current regulatory framework provides enough protection to SMEs when they borrow money.

The committee will also consider the regulation of SME lending and whether banks should be bound by a broader set of duties when dealing with SMEs.

Nicky Morgan, chair of the Treasury committee, said the case of GRG had undermined the trust of small businesses in banks and highlighted the imbalance and potentially exploitative relationships between banks and SMEs.

“Little has changed since GRG to prevent similar mistreatment happening again, nor to guarantee victims access to fair and reasonable redress.

“Entrepreneurs and small business owners are frequently held up as the backbone of the economy, and as part of the solution to the UK's productivity problem.

“They deserve to be treated fairly when they borrow from banks, and have access to justice when things go wrong.”

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