Source · Select Committees · Treasury Committee
Eighth Report - SME Finance
Treasury Committee
HC 27
Published 8 May 2024
Recommendations
5
Accepted
Para 33
Continue dialogue with FOS and review resourcing to serve the SME community
Recommendation
HM Treasury and the FCA should continue their dialogue with the FOS and keep resourcing under active review, to ensure that it has the prerequisite capacity and capability to serve the majority of the SME community.
Government Response Summary
The government accepts the recommendation, stating it will continue engagement with the FCA and FOS, addressing relevant resourcing issues, and aligning FOS rules. It also outlines broader measures announced by the Chancellor to modernise the FOS framework and improve its operational effectiveness.
HM Treasury
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10
Accepted
Continue active review of FOS resourcing to ensure SME community capacity
Recommendation
HM Treasury and the FCA should also continue to the keep resourcing of the FOS under active review to ensure that it has the prerequisite capacity and capability to serve the majority of the SME community. (Paragraph 62) Business debanking
Government Response Summary
The government commits to continuing engagement with the FCA and FOS to address resourcing issues, referencing a package of measures announced at Mansion House, including a Call for Input, an updated Memorandum of Understanding, and a strengthened Wider Implication Framework to modernise the FOS and enhance its operational effectiveness.
HM Treasury
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16
Accepted
Para 88
Consult with BBB to raise awareness and implement annual criteria for assessing SME engagement.
Recommendation
Government, including HM Treasury and the Department for Business and Trade, should consult with the BBB on an ongoing basis to ensure that everything possible is being done to raise awareness and increase engagement from the SME community. This should …
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Government Response Summary
The government agrees with the recommendation and commits to working with the British Business Bank (BBB) to improve SME access to finance, providing over £1 billion in funding for the BBB. It notes that the BBB has already published an SME Impact Report addressing the assessment of its reach.
HM Treasury
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Conclusions (2)
1
Conclusion
Accepted
Small and medium-sized enterprises make a large contribution to the UK economy, accounting for over half of total business employment and turnover. SMEs are struggling with narrow access to finance in the face of rising cost pressures and higher interest rates and are generally pessimistic about their ability to raise …
Government Response Summary
The government welcomes the report on SME finance, recognising their significant contribution and challenges, and commits to a range of actions including launching consultations by Spring 2025, extending the SME Digital Adoption Taskforce, announcing a £4m pilot package for tech adoption, and bringing forward a Small Business Strategy Command Paper next year.
11
Conclusion
Accepted
Para 77
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 …
Government Response Summary
The government agrees that account closure requirements need improving and intends to bring forward legislation to ensure customers receive detailed explanations and longer notice periods when accounts are closed, except in financial crime situations.