Government's New SME Finance Council Not Good Enough
My call to action was in response to the Banking Competition Remedies Fund administering £425m in grants to challenger banks and FinTech companies. The grants were to enable them to establish banking services for SMEs that addressed the service issues experienced by customers of the big five banks.
Today, I feel compelled to restate the case. Why? Because last week, the Treasury and Department for Business, Energy, and Industrial Strategy announced the creation of a finance council designed support lending to SMEs, post-Brexit and "identify and address any barriers" faced by SMEs in securing finance.
Good news surely? Well no, not if you believe such a council should be truly representative.
So, who is represented on the government’s new SME finance council?
The council will be co-chaired by Business Secretary Andrea Leadsom and Economic Secretary to the Treasury John Glen. It will include Small Business Minister Kelly Tolhurst, as well as senior representatives from select banks and alternative lenders. These include Barclays, Bibby Financial Services, British Business Bank, Close Brothers, CYBG/Virgin Money, Funding Circle, HSBC, Lloyds, Metro Bank, RBS, Santander, Secure Trust Bank, Shawbrook, TSB and UK Finance.
Who is not represented on the government’s new SME finance council?
SMEs, for one, as pointed out by the Federation of Small Businesses (FSB), whose chairman Mike Cherry said while the council was "undoubtedly needed", it would require "direct input from firms on the ground".
With a no-deal Brexit possible, Mr Cherry commented: “If we do suffer from a downturn in the months ahead - as a number of forecasters predict - we need reassurances that the banks are not going to turn off the taps for small firms as they did during the financial crash.” Warning that the financial crisis led to “thousands of small business banking horror stories”, Mr Cherry insisted: “We can't have those same mistakes repeated."
Of those thousands of post financial crisis’ small business horror stories, many owners turned to the responsible finance sector for help, and, thanks to the help we provided, survived. The fact that this sector, which is best placed to help and has a pre-existing proven infrastructure to deliver, has not been invited to the table is wrong.
Come on you politicians and bankers, get your act together. If you want to increase access to fair finance for SMEs post-Brexit, if you want to bring social and economic benefit to people, places and businesses, call on the responsible finance industry.
• Read about the sector’s successes in last year’s Responsible Finance Annual Review
• Read the FSB’s response in Small Business