By Andrew James
As a keen follower in developments in SME funding, I was interested in articles last week; one of which focused on the perceived flaws in the regulation of an established route to business funding and one which foresees the Chancellor making announcements to facilitate another source of funding.
Watchdog under fire
A report in The Times referred to the Treasury Select Committee’s feedback on the Financial Conduct Authority’s decision not to punish Royal Bank of Scotland for the actions of its Global Restructuring Group. The Treasury Select Committee made its views on the decision quite clear labelling it a “damning indictment of the regulatory regime and a sad reflection of its inadequacies”. And further that “existing regulatory framework is failing” and referring to a “regulatory black hole”.
- Recommended the creation of a ‘financial services tribunal’ which would make it easier for small companies to obtain an independent ruling on their complaints against banks
- Said commercial loans must be urgently regulated
On the later point the article relays that banks have warned that regulating commercial lending could restrict access to finance.
I will be interested to see how the above plays out beyond the rhetoric.
Defined Contribution pension funds as a source of funding for SMEs
A couple of papers reported that the Chancellor is set to change rules of pension investments to encourage funds to invest in start-ups, or as the Telegraph headline read “Hammond to unleash billions of pension cash to turn UK into start-up powerhouse”.
This follows a statement made earlier this month at the Investment Association in which Mr Hammond said: “At my Budget in a couple of weeks, I will say more about how we can ensure DC pension funds are able to make long-term investment decisions, for the benefit of both their members, and the wider UK economy.”
The FT’s site refers to ‘media reports’ indicating:
- Chancellor of the Exchequer Philip Hammond will announce the plan for defined contribution (DC) pension funds to be used to back high-growth British technology companies in today’s Budget – as he presents a feasibility study which will explore options for pooled investments in patient capital by DC schemes
- HM Treasury will set up a working group for this project, which will be led by industry alongside the British Business Bank and is likely to include representatives from Aviva, HSBC, Legal & General and Tesco
Returning to the Chancellor’s speech at the Investment Association, he sees the [unlocking] “of untapped firepower of defined contribution pension schemes which we expect to hold over £1 trillion of assets by 2025”, as part of the Patient Capital Review – which we have blogged on previously.
I will be watching the Budget with interest for developments on the above and any other matters pertinent to funding for small businesses.