Labour MPs are cranking up pressure on banks to lend more to small businesses. Senior figures back a proposed bill requiring banks to disclose and improve services for underserved communities. The legislation mirrors American rules under the Community Reinvestment Act, mandating support for lower-income areas. Gareth Thomas tabled the bill, arguing that affordable credit remains out of reach for many households and early-stage entrepreneurs.
The bill would force banks to report on reducing financial exclusion and supporting small enterprises. Regulators would then rate their performance, increasing transparency. It also mandates greater support for credit unions and community development finance institutions. These organizations often provide face-to-face lending for individuals and firms overlooked by mainstream lenders.
Political backing comes from select committee chairs like Meg Hillier and Liam Byrne. They argue financial inclusion is a core economic priority, not a box-ticking exercise. Small business advocates welcome the move, citing persistent obstacles entrepreneurs face in securing fair banking services. The proposal highlights growing unease about the government's economic direction and access to affordable credit.
A Treasury source suggested the bill might duplicate existing regulations like the Financial Conduct Authority's consumer duty. They noted banks already have financial inclusion obligations. The legislation is unlikely to advance currently, but signals mounting political pressure for intervention. Campaigners believe voluntary action from the banking sector has proven insufficient for addressing structural barriers.
The bill would force banks to report on reducing financial exclusion and supporting small enterprises. Regulators would then rate their performance, increasing transparency. It also mandates greater support for credit unions and community development finance institutions. These organizations often provide face-to-face lending for individuals and firms overlooked by mainstream lenders.
Political backing comes from select committee chairs like Meg Hillier and Liam Byrne. They argue financial inclusion is a core economic priority, not a box-ticking exercise. Small business advocates welcome the move, citing persistent obstacles entrepreneurs face in securing fair banking services. The proposal highlights growing unease about the government's economic direction and access to affordable credit.
A Treasury source suggested the bill might duplicate existing regulations like the Financial Conduct Authority's consumer duty. They noted banks already have financial inclusion obligations. The legislation is unlikely to advance currently, but signals mounting political pressure for intervention. Campaigners believe voluntary action from the banking sector has proven insufficient for addressing structural barriers.
