The UK’s largest lenders are to reveal how much they lend at a local level.
Danny Alexander, Chief Secretary to the Treasury, believes the new data could help to boost competition and make it easier for small and medium sized businesses (SMEs) to access finance.
Alexander said that seven of the UK’s major lenders, which make up around 80% of the current stock of lending, have voluntarily agreed to publish lending stats across 10,000 individual postcodes. This will make it easier to identify where action is required to help boost access to finance.
He said: “The government is committed to creating a strong and safer banking system that serves the UK economy. From next year businesses will be able to see exactly where the major banks are lending – up to within a few streets of their premises. I’m grateful to Lord Sharkey and Baroness Kramer for raising this important issue in Parliament and their help to deliver this and I welcome the positive engagement of the UK’s largest lenders to make this happen.
“It is a major step forward in terms of transparency and should encourage competition by helping smaller lenders to identify gaps in the market and allowing businesses to hold their local bank to account where they aren’t lending.”
This new data, published for the first time by the end of this year, will allow businesses and the public to see clearly how the banking and building society sectors are serving the wider economy, and in what areas of the UK there less lending.
The data will be published by the British Bankers’ Association (BBA) and the Council of Mortgage Lenders on a quarterly basis and show the outstanding stock of lending that has been committed to customers across three categories:
loans and overdrafts to SMEs mortgages unsecured personal loans (excluding credit cards)
Each postcode will be broken down by category to show the exact lending being made to each. This publication of UK lending data will provide significantly more detailed disclosure than in the USA, which is often cited as the best example of disclosure of lending data.
In particular, it will highlight those more deprived areas where larger banks are often not willing to lend. This, the government believes, will enable local and regional banks and lenders such as Community Development Finance Institutions to move into these areas and offer finance to those customers who are crying out for support to help their business grow.
The first dataset will include data from seven major lenders: Royal Bank of Scotland; Lloyds Banking Group; HSBC; Barclays; Santander UK; Nationwide; Yorkshire and Clydesdale Banks (National Australia Bank).
The government expects more lenders including banks, building societies, credit unions and other types of finance providers to sign up to publishing their data in the future.
BBA chief executive Anthony Browne said: “The banking industry is committed to transparency and is actively supporting the government, business and community groups in understanding the borrowing landscape for individuals and SMEs across the UK.
“This landmark voluntary agreement between the industry and government makes the UK industry one of the most transparent in the world and builds on our earlier commitments.
“The publication of thousands of post codes level figures will help promote greater competition between finance providers and lead to better evidence-based policy making.
“Bank finance is supporting jobs and growth up and down the UK. Britain’s banks are working hard to restore business confidence through initiatives such as building a UK-wide network of business mentors, offering an independently-monitored appeals process for businesses whose borrowing applications have been declined, and working with alternative finance providers to provide access to different products.”
