HM Treasury Post-Implementation Reviews on SME Credit Information and Finance Platforms Regulations

Alongside the U.K government's Autumn Budget delivered on October 30, 2024, HM Treasury has published two post-implementation reviews relating to small- and medium-sized enterprise credit.

The first review is of the Small and Medium Sized Business (Credit Information) Regulations 2015. These Regulations established commercial credit data sharing (CCDS), which aimed to lower the barriers to entry in the SME credit market by improving the availability of SMEs' credit data amongst lenders to reduce information asymmetries and therefore enable newer lenders to differentiate high and low risk SME borrowers.

The second review is of the Small and Medium Sized Business (Finance Platforms) Regulations 2015. These regulations established the bank referral scheme, placing an obligation on designated banks to refer SME business customers that they reject for finance to platforms that can match the SME with alternative finance providers.

In both reviews, HMT concludes that the schemes have broadly met their stated objectives, although the reviews identify areas where improvements could be made. In particular, feedback on the CCDS suggests that it may not be sufficiently flexible in responding to market changes such as the introduction of new products and the withdrawal of older products with low take-up. Similarly, feedback on the bank referral scheme suggests that participants in the scheme may experience frictions in the referrals process, which could be the result of significant differences in the way that designated banks have implemented referrals under the bank referral scheme. HMT plans to consult in spring 2025 on how it can further enhance the Credit Information Regulations and the Finance Platforms Regulations.

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