The Treasury Committee has published the Twenty-Fourth Report of Session 2017-2019 on SME Finance.
The Committee highlighted the investigation into RBS’ Global Restructuring Group (GRG), and noted the FCA’s comment that the failures at the GRG might have triggered disciplinary action, had they occurred in a regulated business.
The Committee commented that the justification for leaving commercial lending outside the regulatory perimeter is ‘feeble’ and called for the Treasury and FCA to introduce a regulatory regime that provides proportionate protection for SMEs. It dismissed the suggestion that the efficacy of self-regulation via industry codes of conduct should be tested first, concluding that “it is clear that extending the regulatory perimeter is now necessary.”
The Report also considered access to both funding and redress for SMEs. The Committee noted a need for further action in both these areas, to be driven by Open Banking and the creation of a Financial Services Tribunal which would be a forum for recourse for disputes that are outside the remit of the FOS (even after expansion of its remit to SMEs from April 2019), either by virtue of complexity or value.