Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Accepted
Identify reasons for Bounce Back Loan scheme performance variances and improve future data collection
Recommendation
The Department’s lack of curiosity surrounding lenders’ performance in the Bounce Back Loan Scheme increases the risk of losses for the taxpayer. The Bounce Back Loan Scheme was set up quickly, with limited requirements for what data lenders should collect and how it should be shared with government. In line with initial agreements, lenders followed their ‘business as usual’ procedures for monitoring, chasing payment, and identifying fraud for government backed loans. This resulted in borrowers being at risk of being treated differently, and variations in the level of risk to the taxpayer. Lenders self-report on performance within the British Business Bank’s lender portal. Data is not, therefore, comparable between banks, and variations in lender performance are not well understood by the Department. The Department, and British Business Bank, have continued to build relationships with lenders, and obtained further information in excess of that agreed at the outset, to assist with fraud prevention and monitoring of performance. Although we understand that lenders have provided all data requested, lenders hold further information that might be helpful. For example, on the underlying credit risk of the loan books, comparing performance on government backed, and non- government backed loans. 6 Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2021–22 Recommendation 2: • The Department should set out what more it will do to identify the reasons for variances in scheme performance and encourage all lenders to reach an optimal level of performance. This is likely to include establishing the full extent of information held by lenders. • The Department should make data collection and sharing explicit within initial agreements when setting up future lending schemes.
Government Response Summary
The government agrees with the recommendation and is undertaking specific workstreams to improve data collection, reporting, robustness, and transparency for lender performance. This includes developing the lender portal, standardising data, improving analysis, and establishing better policies for future lending schemes.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. description of its predecessor department, the Department for Business, Energy & Industrial Strategy’s, lack of curiosity regarding lender performance. Driving positive outcomes in lender behaviour is an important tool to mitigate the risk of avoidable losses to the public purse. The Department for Business and Trade, British Business Bank (BBB) and other government stakeholders work closely with UK Finance and individual lenders to achieve this. A Lender Performance Advisory Board provides government’s oversight and strategic advice, considers action to minimise losses and enables cross-government coordination and escalation routes. The Board is chaired by the responsible DBT Director General and brings together BBB’s Chief Executive with senior leaders from HM Treasury, Cabinet Office’s Public Sector Fraud Authority and UK Government Investments. Current workstreams across these organisations include: • Improving data collection (and embedding those principles into future schemes from the outset), robustness, and transparency to help understand lender performance and prioritise interventions. Work is continuing to develop the lender portal, standardise data definitions, improve the analysis dashboard and review the range of data published. • Improving policies and procedures to ensure lenders are operating in accordance with scheme requirements and striving to minimise avoidable loss. This includes enhanced guidance for debt write-off; pilots testing the case for additional action when wrongdoing is suspected; and a Counter Fraud Strategy. • Targeted action to address individual lender poor performance and maximise recovery of associated losses. This includes audits on lender processes and performance from initial loan approval through to recoveries; claims and write-offs; negotiations to recover losses where poor performance is identified; and undertaking additional assurance activities. DBT will provide a full response to the Committee by the implementation date.