Issues with bank lending revealed in report

A report into the progress of the ‘appeals process’ launched by the Banking Taskforce last year to improve lending to small businesses is due to be published.

While further progress has undoubtedly been made, there are clearly still issues with the extent to which the appeals process is being promoted, both externally and within the banks themselves, according to Professor Russel Griggs OBE, the author of the report and the independent external reviewer of the initiative.

He said in his previous report that he was satisfied with the progress being made, given that the process was still in its infancy: “I said then that banks and all other parties and bodies involved in working with SMEs needed to do more to ensure that their business customers knew that the right to appeal was available, and that the true effectiveness of the scheme would be apparent only when the process had been more widely promoted.

“I said also that the banks needed to make sure that those who lend are properly qualified and trained to do so, and that the reasons why a loan may be declined need to be properly communicated and understood.”

With the second report now imminent, Professor Griggs will be examining to what extent the process has encouraged and engendered a better dialogue between customers and the banks: “My report will show to what extent this is now being achieved,” he ads.

“My report will also look at the key reasons why loans are being declined – both through credit scores and issues of ‘affordability’ – and what progress is being made to better understand the banks’ scoring system and the role of external credit reference agencies. The ultimate objective is to make the lending environment for SMEs operate as smoothly as any lending environment ever can or has. We will soon see how far we have travelled in reaching this objective.”

In the first year of the process there were 2177 appeals and 39.5% of decisions were overturned. (An overturn is where the bank and the customer reach a satisfactory conclusion to a lending application.)