Select committee: Treasury Committee
Conclusion 11
Eighth Report - SME Finance
Published 8 May 2024
Paragraph 77
Addressed to HM Treasury
Treasury Committee SME Finance All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Any SME with a legal business should be able to access a bank account. Banks may need to close business accounts because of regulatory requirements and concerns around financial crime, but thousands of accounts are being closed for vaguely defined reasons relating to “risk appetite” or “reputational risk”. What qualifies for this type of account closure varies from bank to bank with little regulatory guidance. SMEs deserve to know why their account has been closed, and the lack of transparency, alongside inconsistency in how criteria are being applied, is unacceptable.
From: Treasury Committee, Eighth Report - SME Finance (HC 27), paragraph 77, 8 May 2024
Government response
The government responded to the whole report on 12 December 2024 (deadline 8 July 2024).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government welcomes the report and sets out a mixed position: it agrees on bank account closures, the British Business Bank and the Growth Guarantee Scheme, but considers a full consultation on a new dispute mechanism "not warranted at this stage".
- On Basel 3.1, the Government notes that the PRA is removing the SME supporting factor but "will make structural adjustments to another part of the capital framework to maintain the current capital requirements for SME lending". It will continue to monitor US implementation.
- On dispute resolution, the Government considers a full consultation is not warranted at this stage and says it is "doubtful" there is sufficient volume to justify a new mechanism outside the FOS. It notes the BBRS closure decision is a matter for the BBRS and will continue to monitor SME disputes.
- On de-banking, the Government agrees current closure requirements could be improved. The Treasury "intends to bring forward legislation" requiring a detailed explanation and longer notice, unless exceptions such as financial crime apply. It says the FCA recommendations are primarily for the FCA.
- The Government agrees the Growth Guarantee Scheme has an important role. It has been extended to the end of March 2026, and any decision on making it permanent "will be taken at Spending Review".