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BCR business funding scheme under fire

BCR business funding scheme under fire

(3 March 2020 – United Kingdom) Banks are canvassing the British government, members of parliament (MPs) and the European Union (EU) to intervene in a ‘farcical’ government scheme to boost competition in the small business lending sector following a spate of damaging issues, including the damning claim that the biggest recipient of the RBS-funded cache was handing back almost half of its £120 million allotment. 

Banking Competition Remedies (BCR) was set up by the United Kingdom (UK) government to distribute £775 million of capital from the Royal Bank of Scotland (RBS), soon to be rebranded NatWest, as a condition of its state bailout in 2008. However, executives at several banks, including many that successfully bid for awards, have criticised BCR for its secrecy and reluctance to take responsibility for the program’s slow progress.

Bank executives are especially concerned about BCR’s perceived lack of accountability. The most recent updates on stalled progress have exacerbated concerns that BCR awarded the prizes without properly assessing how realistic the recipients’ targets were. BCR has refused to give details on its decision-making process.

“BCR does not have to encourage customers to use the switching scheme, or assess the fitness of applicants because BCR are ‘engine drivers’ whose role is only to ‘apply the terms of the Treasury’s agreement with the European Commission” stated BCR chairman Godfrey Cromwell.

“We would welcome some clarity around how and when these additional funds are going to be deployed, particularly regarding the qualifying criteria if banks are invited to bid for them. We’d be more likely to support a speedy process, with transparent decision criteria focused on realistic outcomes” stated Virgin Money CFO Ian Smith.

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