Lending appeals process launched by banks
April 14, 2011
It has been announced that banks in the UK have launched a new process whereby small businesses that are turned down for a loan when they make an application can appeal against the decision to refuse them the loan. Officials from the British Bankers’ Association said that this was one of a number of new initiatives that were being launched by the banking industry.
Under the new process any small business that has its application for a loan turned down by regular loan assessors will have the automatic right to escalate this issue and have a reassessment by a more senior member of staff at the bank with a view to getting the original decision overturned. However, despite these efforts small business groups are said to be sceptical about the scheme.
An official from the Federation of Small Businesses said that banks still had ultimate control over whether small businesses were granted vital loans or not and that this new process would not make much of a difference. He said that the process did not trigger any independent appeal and would simply mean that it was looked at by another member of the same bank.
Angela Knight, head of the BBA, said: “We are trying to set out very clearly what is the commitment of the industry in how it is going to deal with small businesses. If the answer is no [to a loan application], and most of the time it is yes, businesses want to have a more senior person look at [their application] and they want to have a better discussion about why it’s a no.”
However, the FSB said: “The banks still hold all the cards. Businesses still have to go through each individual bank’s appeal process, and can still be turned down without triggering an independent appeal.”
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