Banks under fire for not treating small businesses fairly on loans
The Financial Conduct Authority (FCA) has written to banks telling them to improve their treatment of struggling small business borrowers
He told banks they must treat small business customers fairly when collecting and recovering debts.
His review included Business As Usual (BAU) and Bounce Back Loan Scheme which has given businesses faster access to finance of up to £25,000 during the pandemic.
The review found that banks were arranging payment plans that were “clearly unaffordable” based on information provided by the customer.
Staff do not have adequate training to provide effective support to clients and make fair decisions on cases.
- Lenders don’t have clear policies to help staff identify and support vulnerable customers – meaning those customers may miss out on the support they need.
- Not having quality assurance and testing for their processes to ensure they deliver fair results to consumers – this can mean problems go undetected.
Sheldon Mills, FCA’s executive director for consumers and competition, said: “People across the country will be hit by the rising cost of living – and that includes small businesses.
“We have been disappointed to see repeated cases of these customers not being treated fairly by banks when they are in difficulty. We expect the whole sector to act quickly to improve this. We will take action if the problems persist.