The UK’s major high street banks are facing another inquiry into their lending habits towards SMEs, amid further criticism from an industry watchdog.
The news comes after MPs launched their own inquiry into the same matter at the end of February. Now the Office of Fair Trading (OFT) has published an update on its own inquiry into business banking, which revealed that the banking industry needed to do more to support, educate and provide for SMEs, lest further action be taken against them.
Small businesses – which might be wishing to gain funds to expand into new markets, geographies, or simply bolster what they are already doing – are unaware of potential sources of finance, according to the OFT report. Specifically, high street banks have been accused of not being forthcoming with information about peer-to-peer lending initiatives and new financial technology lending platforms.
OFT chief executive Vivienne Dews said: “SMEs are a vital driver of growth in the UK. They need access to banking services and loans that meet their needs. Our work suggests there may be competition concerns in this sector.
“We will continue our work over the coming weeks and hand this on to the CMA to conclude the analysis, and decide on the next steps.”
On 25 February, MPs announced that an investigation was to be carried out into the same issue. This inquiry was being conducted by a committee comprising of 13 politicians from across the leading parties, which will look at three main areas: access to finance for SMEs, competition in the sector and the treatment of SMEs by banks.
With dual inquiries, heavy criticism and bad publicity all round, it has not been a pleasant fortnight for high street banks in the press. However, with the Budget fast approaching, it is certainly an area that is going to come under further scrutiny. As SMEs are hailed as an integral part to the UK’s continuing march out of recession, if banks are found to be hindering their progress then it is likely that they can expect an assault on multiple fronts. 
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