The latest report from the Office of Fair Trading (OFT) suggests banks are holding back small businesses from accessing alternative funding.
They are making it difficult for small businesses to get loans from crowdfunders and peer-to-peer lenders by delaying sharing paperwork and important information. Banks are unfairly stopping competition, something which needs to be addressed. According to the report, banks have yet to show they are adhering to the Competition Commission investigation which began 12 years ago.
Known as ‘bundling’, some banks have only let businesses receive loans if they open an account. Vince Cable, Business Secretary, supports the view that banks are not giving enough support to small businesses.
It can sometimes be a complex process if businesses borrow from a number of different lenders as there needs to be a system of priority in place if the borrower defaults on a loan. Clearly more needs to be done though to ensure businesses have as many options as possible when seeking funding.
While banks have agreed to review and change their outlook, if they don’t adopt new ways of thinking, the OFT will impose further action.
The Competition and Markets Authority will be taking over the OFT and Competition Commission in April to look into specific cases.