Source · Select Committees · Treasury Committee
Recommendation 2
2
Acknowledged
Paragraph: 25
Removal of Basel 3.1 SME supporting factor threatens UK SME finance market
Conclusion
The removal of the SME supporting factor under Basel 3.1 threatens to undermine the UK’s SME finance market by increasing capital requirements on lenders to SMEs. This will drive up the cost of finance for SMEs and may restrict the supply of lending as banks shift their loans away from the market. At a time when costs are tight and acceptance rates for finance low, anything that unnecessarily damages the availability of finance to SMEs is unacceptable. Other jurisdictions like the United States and European Union are also not pursuing as strict an interpretation of Basel with regards to SME lending so removal of the SME support factor risks putting the UK out of step with international peers and competitors, with negative consequences for the competitiveness of the UK market.
Government Response Summary
The government acknowledged the Committee’s concerns regarding the removal of the SME supporting factor under Basel 3.1 but made no specific commitments to action.
Paragraph Reference:
25
Government Response
Acknowledged
HM Government
Acknowledged
3. We acknowledge the Committee’s concerns regarding the removal of the SME supporting factor under Basel 3.1.