Recommendation 5

HM Treasury has not yet finalised the rules lenders need to follow to ensure overdue loans are repaid. If a borrower does not repay the loan HM Treasury expects lenders to try to recover the money owed. But there is no requirement to complete this recovery process before the lender can claim the Government guarantee. HM Treasury is yet to outline the specific rules around the recovery process but plans to complete the work in relation to the loan recovery process by winter 2020–21, in advance of the first repayments which are due in May 2021. At present, lenders are expected to pursue unpaid loans using their own businesses processes and there is a lack of clarity about when lenders can claim the guarantee. The recovery process is unique for each lender, and without detailed rules from HM Treasury risks borrowers being treated differently depending on their lender, and a Covid-19: Bounce Back Loan Scheme 7 potentially inconsistent use of the Government guarantee. Recommendation: HM Treasury should ensure that the recovery rules are confirmed prior to repayment, and that they are uniform in their fair and thorough recovery of loans.