New Bank Referral Scheme Under Investigation
Last month I explained the deal with the new Banking Referral Scheme, launched in November by the Government with the backing of the British Banking Association. The scheme, set up to close the funding gap for British SMEs, had been heralded by the financial website of the year ‘This Is Money’ as an ideal way for SMEs to find the finance they need. Carl D’Ammassa, contributor to This Is Money and group managing director at specialist lender Aldermore, predicted that the scheme could be a game-changer for SMEs “if the process is kept simple and isn’t too time-consuming.”
Yet, last week The Times broke the news that the scheme is under investigation with the Treasury parachuting in Professor Russel Griggs, who has previously led industry-wide reviews of small business lending and runs Better Business Finance, a separate appeals scheme for those that are turned down for bank loans.
Whilst no facts or figures are available to identify what it is that is – or isn’t –happening, Professor Griggs has pointed out that Better Business Finance got off to a slow start too. The Times reports that the three Government Approved online referral schemes so far (Business Finance Compared; Funding Options and Funding Exchange) have been told not to share any data, also stating that:
“It is understood that some banks are concerned about alienating the people they turn down if they recommend a scheme that then also turns them down.”
Regardless of whether SMEs are being referred to the scheme, or choosing to use it, Responsible Finance companies are still helping the 20% of SMEs that banks turn away to find funding. If you are one of these, it’s worth taking a look at Responsible Finance’s Finding Finance Portal.