New scheme bolsters lending to UK business
CMM Rural has noted two developments this week that should benefit rural businesses.
Firstly, the Bank of England and HM Treasury have launched the Funding for Lending Scheme (FLS), which is designed to boost lending to both firms and households.
Under the scheme, banks and building societies can secure cheaper funding.
In addition, for every pound of additional lending achieved, an additional pound of FLS cash will be made available to lenders participating in the scheme.
So as banks increase lending, their overall funding costs should fall and borrowers should fell the benefit through lower interest rates.
According to Chancellor of the Exchequer, George Osborne, the initiative will “inject new confidence into our financial system and support the flow of credit to where it is needed in the real economy”.
Separately, the Office of Fair Trading (OFT) has just announced that it will be taking a look at the banking market for SMEs.
The work will accompany a review of the personal current account market, addressing competition concerns and the general “lack of customer focus” across the UK’s wider retail banking market.
The personal current account review will include looking in more detail at the way in which consumers make decisions and engage with retail banking services.
OFT director, Claire Hart, comments: “We are concerned that a lack of effective competition means the retail banking sector is not working in the interest of customers and businesses.
“We want to see banks become more customer-focused and this will be the central theme of our programme of work going forward.”
CMM Rural will be keeping you up to date with new developments among lenders, and much more, as we continue to scour the market for the best deals for our clients.