Vince Cable: ‘banks are misleading small firms’

Vince Cable has attacked bank claims that they are approving at least four out of every five small business loan applications as “misleading” ahead of the launch of Government ideas to improve the flow of finance.

The Business Secretary said that the banks had made it more difficult for businesses to apply and that they were failing to meet demand.

Market leader Royal Bank of Scotland (RBS) and Lloyds Banking Group have both stated that loan application approvals stand at more than 80pc.

Stephen Pegge, chairman of the British Bankers’ Association’s (BBA) small business panel, recently said the rest of the industry was hitting this rate, too.

However, Mr Cable said: “This is misleading. I think they are raising the hurdle. All the evidence from business, from the Institute of Directors and other bodies, is that banks are not lending as much as is needed.”

The Treasury and the Business Department will launch a consultation this week on business finance that will discuss the merits of imposing new lending targets on the semi-nationlised banks. Mr Cable has said that “mandatory action” to force Lloyds and RBS to lend more was attractive.

However, a Treasury source said at the weekend that the Government was still considering how effective such targets were following the last government’s inability to force the two banks to meet legally binding lending targets during the past year.

Read more: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7897384/Vince-Cable-banks-are-misleading-small-firms.html

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