The federal government has been accused of caving to huge banks and setting the scene for an additional monetary scandal after refusing to heed calls by the influential Treasury choose committee to manage small enterprise lending.
Enterprise lending remains to be not regulated within the UK, an anomaly that has left victims with out the safety of the Monetary Conduct Authority, the Metropolis regulator.
“While the FCA has famous that it’s cheap for presidency and parliament to evaluate what it regulates, the federal government has flat out – and wrongly – refused to deliver business lending into regulation,” stated the Home of Commons committee chair, Nicky Morgan.
“The FCA have to be given the powers to supply safety to SMEs now. If the federal government continues to bury its head within the sand, scandalous occasions corresponding to these at RBS’s International Restructuring Group might re-occur.”
The implications of a scarcity of regulation have been highlighted final yr when the FCA concluded a four-year investigation into RBS’s now-defunct GRG. Victims had accused GRG of pushing their companies into failure earlier than stripping them for belongings that have been later offered on. Whereas the FCA discovered proof of mistreatment, it stated actions by GRG in the end fell exterior its jurisdiction, as business lending is unregulated within the UK.
In its response to the Treasury committee’s suggestions, the federal government stated it “doesn’t imagine there’s a clear case” for regulation, which might increase prices for lenders that might be handed on to companies. It added that financial institution behaviour had “modified considerably” because the years following the 2008 banking crash, and famous that lenders have been already signed as much as a code of conduct for greatest follow.
The federal government’s response additionally prompted criticism by the SME Alliance, which represents enterprise banking victims, for caving in to banking pursuits.
Nikki Turner, director of the SME Alliance and a sufferer of the HBOS Studying fraud, stated: “The federal government and the FCA are betraying British companies, whereas acknowledging they’re the spine of this nation, as a result of they’re unwilling to tackle the large banks.”
She added: “The concept as a result of the banks are usually not behaving as badly as they did a decade in the past it’s all OK is like inviting Hannibal Lecter to dinner as a result of he hasn’t killed anybody not too long ago.”