Source · Select Committees · Public Accounts Committee
Recommendation 5
5
HM Treasury has not yet finalised the rules lenders need to follow to ensure overdue...
Conclusion
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.
Government Response
Not Addressed
HM Government
Not Addressed
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The government has worked closely with UK Finance and accredited Scheme lenders to develop a consistent, industry-wide approach to the collection and recovery of the loans. Guidance has now been shared with accredited lenders by the Bank. In addition, the government has engaged with the Financial Conduct Authority and the Prudential Regulation Authority to ensure that the guidance aligns with the relevant regulations. 5.3 As the Committee will appreciate, it would not be appropriate to publish this guidance. To do so would notably risk educating criminals about the approach to the collection and recovery of loans, therefore compromising the processes by which lenders go about recovering funds.