UK Government responds to Treasury Committee report on SME Finance

The U.K. government has published its response to the Treasury Committee report on access to financing for small businesses. The report, by the Treasury Select Committee of the previous Parliament, made recommendations related to de-banking and the Business Banking Resolution Service. The government makes a number of commitments such as: (i) continued funding for key business support programs in 2025/26; (ii) continued funding for the Help to Grow: Management programme; (iii) extending the SME Digital Adoption Taskforce by at least six months; and (iv) bringing forward a Small Business Strategy Command Paper next year.

The government also acknowledges the Treasury Committee's concerns about the removal of the SME supporting factor under Basel 3.1 and notes the Prudential Regulation Authority's adjustments in this area, commending the PRA's consideration of feedback and adaptations. On business de-banking, the government agrees that current account closure requirements could be improved and notes that HM Treasury intends to bring forward legislation so customers receive detailed explanations when providers close their accounts and a longer notice period (subject to certain exceptions). It also plans to monitor for evidence of de-banking of legitimate businesses and the work of relevant bodies, including the Financial Conduct Authority. On personal guarantees, the government will take a close interest in the outcomes of the FCA's current investigation into personal guarantees and will continue to monitor for evidence of the effect and proportionality of the use of personal guarantees. On December 9, 2024, the FCA published a webpage on its follow-up work on the Federation of Small Businesses super-complaint concerning the use of personal guarantees by lenders to support loans to small businesses.

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