Equifax: CMA order on SME lending a boost for UK business
The Competition and Markets Authority (CMA) has ordered the UK’s largest SME lenders* to produce new SME loan pricing and eligibility tools. Nic Beishon, Head of Commercial, Equifax UK & Ireland, comments:
“The CMA’s order to improve SME lending services is a much-needed step to increase competition. We are in an uncertain environment for the UK economy and all moves to support our smaller businesses should be welcomed. Mark Carney has given banks ‘no excuse’ not to pass on rate cuts, and the CMA’s moves will help ensure that SMEs can borrow at the most competitive rates available.
“These tools will bypass time-consuming paperwork and make it much easier for SMEs to find out if they’re eligible for loan. By speeding up the decision making process, and providing an early indication of interest rates, SMEs will be much more likely to shop around for the best deals.
“The banks covered by the order need to prioritise implementation to make sure they have the right processes and technology to support robust lending decisions under the new regime. While only four banks are obliged to introduce the tools at this stage, we believe that other lenders, including challenger banks, should introduce the same tools to ensure their offering stacks up against larger players.
“Access to lending is vital to support the growth of SMEs, yet the CMA found that less than 20% of SMEs have a loan. Increasing the uptake will enable more businesses to invest for the future.”
The order is part of the CMA’s final report on its ‘Retail banking market investigation’. The provisional report issued in May cited the HSBC loan eligibility tool developed with Equifax as the most advanced it is aware of on the market.
*Royal Bank of Scotland, Lloyds, Barclays and HSBC.