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UK Treasury Committee: FCA to compel quarterly SME account-closure data; rethink PRA’s Basel 3.1; replace Business Banking Resolution Service with independent redress amid declining SME lending

Published on: 08 May 2024

Published by a Law360 reporter
Legal News
Article summary

Treasury Committee report

Following an inquiry into the obstacles SMEs face in obtaining finance, the influential Treasury Committee urged the Financial Conduct Authority (FCA) to require banks to disclose, publicly, every quarter, how many business accounts they have shut and the reasons for doing so. This would oblige financial institutions to be clearer about why SMEs are being “de-banked” — the closing of accounts held by organisations or individuals deemed to present a financial, legal, regulatory, or reputational risk to the lender. Harriett Baldwin, the committee’s chair, said there is no escaping the reality that smaller firms have endured a torrid spell over recent years. Senior MPs also rejected proposals from the Prudential Regulation Authority to strip out SME-supportive elements from the new Basel 3.1 regime, warning it could leave British small businesses at a disadvantage compared with European and American rivals. Basel 3.1 comprises a set of rules banks must follow to make sure they hold sufficient funds to cover the risks they take...

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