The government has implemented a new credit data sharing scheme, which it says will make it easier for challenger banks and alternative finance providers to lend to small businesses.
Under the Credit Information Regulations, nine banks will be required to share data on their small to medium sized business customers with the designated CRAs, Experian, Equifax and Creditsafe. These CRAs must then share this data equally with all finance providers.
The banks are:
It's recently been noted by bodies such as the Competition Commission, that there's a lack of information about the creditworthiness of small to medium sized businesses; a barrier to competition in the lending market.
The new regulations mean smaller banks will be able to compete against the larger ones in lending to the small business market.
Harriett Baldwin, the Economic Secretary to the Treasury, said: 'The best way to deliver this is to increase competition in the banking sector and remove the barriers to new sources of finance for small to medium sized businesses. Requiring banks to share data is a major structural reform that will level the playing field between banks and alternative finance providers.'
The government expects data sharing to begin later this year when tests between banks and CRAs confirm that data can be shared accurately and securely.
In Budget 2016, the government further boosted lending to small businesses by alternative finance providers with the extension of the Bank Referral Scheme.
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Under the Credit Information Regulations, nine banks will be required to share data on their small to medium sized business customers with the designated CRAs, Experian, Equifax and Creditsafe. These CRAs must then share this data equally with all finance providers.
The banks are:
- AIB Group (UK)
- Bank of Ireland (UK)
- Barclays Bank
- Clydesdale Bank
- Northern Bank Ltd
- HSBC Bank
- Lloyds Banking Group
- Royal Bank of Scotland Group
- Santander UK
It's recently been noted by bodies such as the Competition Commission, that there's a lack of information about the creditworthiness of small to medium sized businesses; a barrier to competition in the lending market.
The new regulations mean smaller banks will be able to compete against the larger ones in lending to the small business market.
Harriett Baldwin, the Economic Secretary to the Treasury, said: 'The best way to deliver this is to increase competition in the banking sector and remove the barriers to new sources of finance for small to medium sized businesses. Requiring banks to share data is a major structural reform that will level the playing field between banks and alternative finance providers.'
The government expects data sharing to begin later this year when tests between banks and CRAs confirm that data can be shared accurately and securely.
In Budget 2016, the government further boosted lending to small businesses by alternative finance providers with the extension of the Bank Referral Scheme.
To comment on this article, log in or sign up to UKBF.
