SMEs are truly the lifeblood of the economy. Over 5.5 million SMEs in the UK provide economic dynamism and contribute to 51% of all private sector turnover in the UK. As a result of the APPG’s past focus on Dispute Resolution, the Group has been instrumental in both expanding the remit of the Financial Ombudsman Service to include more SMEs and establishing the new Business Banking Resolution Service (BBRS). The Group is now turning its attention to the wider SME banking and finance sector and is launching a new stream of work with the aim of promoting the diversity of banking and finance options for SMEs.
The business banking market is expanding with a diverse range of providers offering a diverse range of banking options. However, the market is heavily concentrated with 85% of business current accounts and almost 90% of business loans being provided by the UK 4 largest banks. There is a general lack of awareness amongst SMEs that a diverse range of banking and financing options exist. This is thwarting competition and innovation in the sector, at the expense of SMEs who may not be accessing the most appropriate financial products to enable them to survive their early stages of life and thrive going forward.
The APPG will host two roundtable sessions for stakeholders to provide an initial forum to discuss the issues and formulate initial policy proposals to achieve the objectives. The first will have a customer-focus and will assess how to increase SME awareness of, and access to financing options. The second will focus on the wider marketplace and will assess what more can be done to increase competition and ensure that regulation is proportionate.
Following the roundtable, the APPG will formalise the outputs of the roundtables into policy proposals and produce a consultation document to be circulated to attendees and other stakeholders for formal feedback. The APPG will also arrange one-on-one discussions with key stakeholders and participants. The roundtable and subsequent consultation responses will form the basis of a report outlining the APPG’s policy proposals on a voluntary, regulatory and legislative basis to achieve the objectives of the workstream. This report will be launched in parliament at a networking event for stakeholders. This report will then form the basis of the APPG’s parliamentary campaigning going forward.
- Increase SME awareness of banking & financing options & improve the financial education required for SMEs to select the most appropriate option.
- Identify and reduce the barriers which restrict SMEs from accessing finance and promote quicker and more efficient financing decisions.
- Increase competition in the SME banking marketplace and ensure that regulation is proportionate and pro-competition.