The Financial Conduct Authority outlined measures on 17 September to improve SME finance. Its review found no evidence that its regulation was a major barrier. It nevertheless identified obstacles for borrowers and lenders.
SMEs receive 21% of the value of UK business loans. They account for 60% of private-sector employment. The review began in March and received 19 written submissions.
COSTLY CREDIT AND BORROWER RISKS
Stakeholders told the FCA that limited transparency and commission-based incentives for unregulated brokers could steer microbusinesses towards expensive, unsuitable short-term borrowing.
UK Finance is supporting the development of voluntary digital verification with banks and building societies to reduce repeated checks.
REGULATORY WORK AHEAD
The FCA’s response includes consumer credit reform and open finance. Better financial information could help lenders assess businesses with limited histories or intangible assets.
An early 2027 discussion paper will outline options for the first open-finance framework, with SME lending a priority. Following the Treasury's repeal of prescriptive Consumer Credit Act provisions, the FCA intends to consult on the key elements of the consumer credit framework.
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