"Financing projects from £50,000 to £100 million"

Banks accused of exploiting firms looking for loans

Banks accused of exploiting firms looking for loans

Britain's major banks could face fines if they fail to convince regulators that they have not engaged in anti-competitive measures and exploited firms looking for credit.

Nine banks, including high-street giants Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group, stand accused of forcing small businesses that approach them for a loan to take out a business bank account.

The Office of Fair Trading (OFT) has written to the banks, saying it has evidence that some of them are asking SMEs to open business bank accounts if they wish to qualify for commercial loans.

Banks have now been asked to prove that they are not engaging in what the regulator identifies as “anti-competitive” practices, warning them that they face fines if they cannot justify their position.

The announcement comes at a loaded time for the business lending environment, following recent allegations that the taxpayer-owned banks may have driven some firms out of business in order to profit from their assets.

According to the BDRC Continental Quarterly SME Finance Monitor, businesses remain low on confidence that their loan applications will be successful.

The monitor showed that only a quarter of directors applying for a new credit facility believed that they had any chance of securing a loan, and that only half of those applying to renew their finance arrangements thought they would be successful.

But lending conditions and confidence should improve with the announcement that the Funding for Lending Scheme, which has reinvigorated the residential mortgage market, will be focussed entirely on commercial lending from January 2014.

Monday, 09 December 2013 16:12
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