The report of the Business Finance Taskforce

October 2010

The chief executives of the major UK banks with the BBA agreed in July 2010 to setup a Taskforce to review what more banks could do to support the UK economy, through financial and practical means, as it moves into recovery.

The Taskforce was designed to address concerns about the supply and price of credit from banks and perceptions that banks are not adequately supporting viable businesses. A particular focus was small businesses.

The Taskforce reported on 15 October 2010 and have committed to 17 actions in three broad areas: Improving Customer Relationships; Ensuring better access to Finance and Providing better information and promoting understanding.

Only time will tell as to whether these proposals will make a real difference to the way banks deal with businesses.

The actions are:

Improving customer relationships

Banks will:

Support a network of business mentors by working with the business groups to deliver this free service to small businesses across the UK

Improve service levels to micro enterprises (businesses with fewer than 10 employees and turnover or a balance sheet under €2m) by setting out in a new Lending Code the levels of service banks will provide and outlining additional sources of help and advice

Publish lending principles which clearly set out the minimum standards medium-sized and larger businesses can expect when asking banks for loans and other services

Establish transparent appeals processes for when loan applications are declined, with processes independently monitored by a senior independent reviewer, who will publish the results of their review, to ensure each bank has a fair and equitable appeals process

Initiate a pre re-financing dialogue 12 months’ ahead of any term loan coming to an end, which will include a timely review of business and re-financing needs and an assessment of what needs to be in place ahead of loan expiry to maximise the prospect of successful re-financing.

Ensuring better access to finance

Banks will:

Establish and invest in a new £1.5 billion Business Growth Fund (built over a number of years) to fill a crucial gap in the market and provide capital for viable businesses which want to invest and grow

Support the Enterprise Finance Guarantee Scheme, seeking continued Government backing through to 2012, and accommodating any changes made by Government

Help mid-sized businesses access syndicated debt markets by raising customer awareness, training customer-facing staff and engaging more actively with business groups and customers

Improve access to trade finance through targeted SME awareness-raising campaigns and exploring possible regulatory adjustments with the FSA. Seek to open with Government access to trade finance products for businesses that qualify for the Enterprise Finance Guarantee Scheme

Signpost alternative sources of finance, giving customers helpful information and advice if a loan is declined and raising awareness about the financial solutions they should consider

Help improve the supply of credit to the wider economy, working with the authorities to ensure that wholesale markets can support the necessary lending capacity as the economy recovers

Providing better information and promote understanding

Banks will:

Fund and publish a regular independent survey, commencing in early 2011, to a methodology agreed with Government and business groups, so there is an agreed and authoritative set of data on business finance demand and lending supply

Enhance the cross-industry lending dataset by broadening the statistics on lending available for wider bands of business activity; on lending to deprived areas; and on national and regional data on the provision of bank support to business start-ups

Hold regional outreach events throughout 2011 with business groups to enable business customers and business groups to meet with key staff from the banks to answer questions and explain what services are available

Improve customer information including a review of literature and other materials, so customers can more easily understand what products will best meet their needs

Host a dedicated website through the BBA to draw together and link useful sources of information to help customers access the most appropriate information. This will also connect mentoring networks

Establish a Business Finance Round Table where senior representatives from the banks and business groups meet regularly to discuss and review trends, identify emerging areas of concern, ensure problems are addressed and facilitate the implementation of the Taskforce initiatives.