Treasury - Eleventh Report
Conduct and competition in SME lending

Here you can browse the report together with the Proceedings of the Committee. The published report was ordered by the House of Commons to be printed 10 March 2015.


Terms of Reference

1 Introduction

The importance of SME lending

Evidence received by the Committee

2 The state of the SME lending market

Current market conditions

Underserved segments of the market

Equity finance

Government schemes

Importance of perceptions

Communications from banks

Public debate on the causes of restricted credit to businesses

Availability of data

Data on alternative lenders

3 RBS Global Restructuring Group (GRG)

Treatment of customers in GRG

Allegations against GRG

Responses to allegations against GRG

FCA review into GRG

Conflicts of interest, customer perceptions and governance

GRG as a profit centre

Future of GRG

4 Mis-sale of Hedging Products

FCA Interest Rate Hedging Product review

Operation of the scheme

Alternative product redress

Criticisms of the FCA IRHP review

Drafting of the voluntary agreements

Possible conflicts of interest

Complainant access to the independent reviewer

Complainant access to case information

An appeals process?

The scale of the problem

Transparency of the voluntary agreements

Tailored Business Loans

Break costs and similarities with standalone IRHPs


Sales practices

Regulation of TBLs

Clydesdale's review of TBLs

Challenging banks through the courts

Financial Ombudsman Service

5 Competition in SME lending

A history of competition problems

The current state of competition

How have new entrants affected concentration?

Why have competition problems persisted?

Barriers to entry

New entrants, branch networks and "critical scale"

Limited switching behaviour from SMEs

Product comparability and SMEs' perceptions of banks

Concentration and linkages between markets

Mutual reinforcement of competition problems

Policies to improve competition

Multiple credit searches

Price comparison

Account switching for SMEs

A structural remedy?

The FCA's competition objective

The FCA and the Competition and Markets Authority (CMA)

6 Alternative finance

Crowdfunding/peer-to-peer finance

Advantages of crowdfunding/peer-to-peer lending

Crowdfunding and competition

Risks of crowdfunding

Conclusions and recommendations

Formal Minutes


Published written evidence

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© Parliamentary copyright 2015
Prepared 13 March 2015