Small and medium-sized enterprises (SMEs) in the UK may still be poorly served by the country’s main banks according to the Office of Fair Trading (OFT).
Publishing an update on its inquiry into business banking, the OFT- a not-for-profit and non-ministerial department of the UK government – said it was concerned that competition in the sector may not be working and banks may be hindering small and medium-sized businesses (SMEs) from getting loans from alternative providers.
“SMEs are a vital driver of growth in the UK,” said Vivienne Dews, the OFT’s chief executive (CEO). “They need access to banking services and loans which meet their needs.” While the UK high street banks have agreed measures to improve their performance, the OFT warns that it could take action unless its concerns are addressed.
Among the issues it raised was that banks are making it hard for their business customers to borrow from other lenders. Businesses seeking a loan from peer-to-peer (P2P) lenders, for example, face long delays waiting for their bank to share information, or process the paperwork.
The OFT also accused some banks of continuing non-compliance with guidelines set out in an investigation by the UK’s Competition Commission 12 years ago.
That inquiry found that banks sometimes required customers to open an account as a condition of receiving a loan. The OFT says there is evidence that the practice, known as ‘bundling’, is still prevalent.
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