The National Federation of Retail Newsagents (NFRN) has expressed dismay at the lukewarm response that banks have given to a new £8bn scheme to kick start lending to small businesses.
The NFRN’s reaction came as HSBC said it would not be utilising the Funding for Lending Scheme (FLS), while Santander, Lloyds, the Co-op and Virgin Money said they were ‘assessing their options’. Only the part nationalised banks have welcomed the initiative.
NFRN National President Alan Smith said: “If this FLS fails to get lending going, it will follow in the wake of many other incentivisation schemes the Government has tried: the National Loan Guarantee Scheme (which was launched in March this year), Project Merlin and the Enterprise Guarantee Scheme.
“Such a failure would leave the market in the position of continuing to get loans from non-banking finance institutions or for the Government to lend directly to businesses through the Bank of England.”
His comments came at the same time that a consultation into regulation surrounding non-bank financial institutions was launched.
Smith called upon the Government to deliver a simple solution to what he described as “an artificially complex problem”.
He said: “Banking must be simplified so irregularities cannot be hidden. Banks should be split into separate investment and High Street banking divisions, the banking sector should be opened up to competition and a unified and fit-for-purpose regulatory body must be set up. If all else fails, lending to micro businesses must come directly from the Bank of England.”