The bank referral scheme for SMEs that was created by the Small Business Act in 2015, and began in November 2016, is being reviewed by the Treasury.
Professor Russel Griggs will review the scheme, on which no targets or limits were set by the government, after ‘disappointment’ from civil servants over the use of the scheme by SMEs, according to a report in The Times.
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The referral scheme was designed to take SME leasing business that was rejected by nine major bank lenders; RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust.
One of three platforms; Funding Options, Funding Xchange and Bizfitech, would source alternative finance for the lead.
Leasing Life understands the numbers one bank had been referring through the scheme were very small, and that designated platforms were struggling to get referrals in from that bank and other lessors.
“Customers are generally comfortable with finding their own arrangements if we decline them. It is a smaller section of customers… most of those are going to want to work it out for themselves rather than consent to their data being passed to a third party,” a source at one of the nine banks told Leasing Life.
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By GlobalData“Customers might think they are being seen as desperate if their data is put into a portal for everyone to see and fish for their business.”
HMT will publish statistics on the success of the policy since its launch sometime after the general election on 8 June.
The HMT spokesperson said: “Firms across the UK are already benefiting from the referral scheme and we are confident that it will continue to increase access to finance for small and medium sized businesses and boost competition in the UK’s banking sector.
“We welcome the role Russel Griggs is playing in ensuring that the scheme is as effective as possible for small businesses.”
