Banks are ‘destroying’ rather than supporting businesses, says report
Fri Aug 02, 2013 10:08 AM
Britain’s banks are consistently failing to lend to SMEs and in many cases are withdrawing funding, according to a censorious new report by Lawrence Tomlinson, entrepreneur in residence at the Department for Business, Innovation and Skills (BIS)
Tomlinson’s report for the business secretary Vince Cable argues that banks are failing to meet the government’s aim of encouraging growth through lending to small and medium businesses. This includes Lloyds Banking Group and Royal Bank of Scotland (RBS), which are part-owned by taxpayers.
“We have seen peoples' businesses and peoples' livelihoods being destroyed, rather than being supported, by banks," Tomlinson told Sky News.
Tomlinson pointed to the fact that banks are either charging small businesses “astronomical fees” which threaten the very existence of businesses or are actively discouraging SMEs from applying for lending. Other problems he highlighted were a conflict of interest between banks and their consultants and a desire to make huge profits above all else.
A BIS spokesman said that Vince Cable “has seen the case studies Lawrence Tomlinson has compiled and finds them worrying, particularly the apparent reluctance amongst businesses to speak out".
Meanwhile, a spokesman for RBS said: “We have established an independent review of our lending standards and practices to identify steps we can take to support even more SMEs and play our part in securing the economic recovery."