Recommendation 13

The NAO reported that the arrangements for pursuing borrowers offered limited commercial incentive for lenders to maximise recovery of overdue loans.28 In contrast, the Bank told us that it believed that lenders have strong legal, contractual and regulatory obligations to recover loans. This included oversight by the FCA and lender audits by the Bank to ensure lenders are complying with the Scheme rules.29 The Department subsequently explained at the time of the launch ministers made the decision that 12 months was a reasonable cap for the recovery process and it can claim back any guarantee from a lender if lender audits show they have not followed the required Scheme rules.30 The Bank told us that, so far, it had audited every lender, but that this had focused on their loan disbursement rather than recovery activity because repayments have only recently started. It explained that the second phase of the Bank’s audit will focus on recoveries and 23 Qq 30, 62–64, 67; Comptroller & Auditor General, Investigation into the Bounce Back Loan Scheme, Session 2019–2021, HC 860, 7 October 2020, para 2.29 24 Q 63; Correspondence from Catherine Lewis La Torre, Chief Executive, British Business Bank, Re Bounce Back Loans, 27 January 2022, published 31 January 2022 25 Q 73 26 Correspondence from Sarah Munby Permanent Under-Secretary of State, Department for Business, Energy & Industrial Strategy, re PAC hearing on the Bounce Back Loan Scheme, dated 9 February 2022, published 22 February 2022 27 Qq 1–4, Public Accounts Committee, Oral Evidence: BEIS Annual Report and Accounts, 2020–21, HC 1052, 23 February 2022; and Comptroller & Auditor General, Investigation into the Bounce Back Loan Scheme, Session 2019–2021, HC 860, 7 October 2020, para 3.8 28 C&AG’s Report, para 20 29 Qq 14, 24 30 Qq 24–26, 74–75; Correspondence from Sarah Munby Permanent Under-Secretary of State, Department for Business, Energy & Industrial Strategy, re PAC hearing on the Bounce Back Loan Scheme, dated 9 F