FSB calls for end to high street bank monopoly
The Government needs to do more to break the high street banks' monopoly on finance for small businesses, according to the Federation of Small Businesses (FSB).
The FSB said that small business owners have nowhere to turn if they are refused credit by the high street lenders.
It proposes:
• Struggling banks should not be sold off to other high street lenders as this can stifle competition in the financial sector
• Alternative sources of finance should be provided locally. Regional Development Agencies should be restructured to offer loans and Essex County Council's Bank of Essex model should be replicated around the UK. The Enterprise Finance Guarantee and funds already allocated from the European Investment Bank could also be offered via these routes.
• The Post Office should be turned into Post Bank offering support for small firms.
• Financial Intermediaries, recently created by the Government, should be actively promoted to viable small businesses unable to access finance.
"As the anniversary of the credit crunch approaches, it is important to consider the impact of the banking crises and what it means for future relationships with small businesses to avoid getting into a similar situation," said FSB national chairman John Wright.
"Despite Government bailouts and interest rates set at a record low, small firms are still finding it tough to access affordable loans and overdrafts from banks.
"This is compounded by the fact that much of the support provided by the Government is only available through the banks and often this isn't replicated at branch level.
"The FSB would like to see more alternative sources of finance provided locally such as through Regional Development Agencies, local councils or post offices."
