Bank referral scheme: Difference between revisions
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{{DISPLAYTITLE:Bank referral scheme}} |
{{DISPLAYTITLE:Bank referral scheme}} |
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The [[Government of the United Kingdom|UK government]]-mandated '''bank referral scheme''' (Designated Platforms) was created by the Small Business, Enterprise and Employment Act 2015<ref name=":0">[http://www.legislation.gov.uk/ukpga/2015/26/section/5/enacted Small Business, Enterprise and Employment Act 2015 2015 c. 26PART 1Financial information about businessesSection 5]</ref> to allow the UK government to track businesses and their requests for business finance<ref>{{Cite web|url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/341741/Summary_of_Responses_-_platforms_for_rejected_SME_finance.pdf|title=Goverment Responses Platforms for rejected SME finance|last=|first=|date=|website=|publisher=|access-date=}}</ref> |
The [[Government of the United Kingdom|UK government]]-mandated '''bank referral scheme''' (Designated Platforms) was created by the Small Business, Enterprise and Employment Act 2015<ref name=":0">[http://www.legislation.gov.uk/ukpga/2015/26/section/5/enacted Small Business, Enterprise and Employment Act 2015 2015 c. 26PART 1Financial information about businessesSection 5]</ref> to allow the UK government to track businesses and their requests for business finance.<ref>{{Cite web|url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/341741/Summary_of_Responses_-_platforms_for_rejected_SME_finance.pdf|title=Goverment Responses Platforms for rejected SME finance|last=|first=|date=|website=|publisher=|access-date=}}</ref> The scheme was launched in November 2016 after more than two years of delays.<ref>{{Cite news|url=http://www.altfi.com/article/2361_bank_referral_scheme_goes_live|title=Bank referral scheme goes live - AltFi News|newspaper=AltFi|access-date=2016-11-02}}</ref> |
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Businesses who have been unsuccessful in a [[credit]] application process with a bank will be asked for their permission to have their financial information passed to designated finance platforms, who can contact the business in a regulated time-frame. |
Businesses who have been unsuccessful in a [[credit]] application process with a bank will be asked for their permission to have their financial information passed to designated finance platforms, who can contact the business in a regulated time-frame. |
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The three designated finance platforms selected are [[Funding Options]], Funding Xchange and Bizfitech.<ref>{{Cite news|url=https://www.gov.uk/government/news/new-matchmaking-service-for-small-businesses-looking-for-finance|title=New matchmaking service for small businesses looking for finance}}</ref> |
The three designated finance platforms selected are [[Funding Options]], Funding Xchange and Bizfitech.<ref name="gov.uk">{{Cite news|url=https://www.gov.uk/government/news/new-matchmaking-service-for-small-businesses-looking-for-finance|title=New matchmaking service for small businesses looking for finance}}</ref> |
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== How the Referral Scheme works == |
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The bank referral scheme imposes a [[Statutory law|statutory duty]] on selected UK high street [[banks]] to pass on businesses who have been unsuccessful in applying for finance to the three designated alternative finance platforms, who will then phone the businesses in order to refer them to [[alternative finance]] providers<ref>{{Cite news|url=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11014563/Banks-to-be-forced-to-increase-competition-in-SME-lending.html|title=Banks to be forced to increase competition in SME lending|newspaper=Telegraph.co.uk|access-date=2016-11-16}}</ref> |
The bank referral scheme imposes a [[Statutory law|statutory duty]] on selected UK high street [[banks]] to pass on businesses who have been unsuccessful in applying for finance to the three designated alternative finance platforms, who will then phone the businesses in order to refer them to [[alternative finance]] providers.<ref>{{Cite news|url=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11014563/Banks-to-be-forced-to-increase-competition-in-SME-lending.html|title=Banks to be forced to increase competition in SME lending|newspaper=Telegraph.co.uk|access-date=2016-11-16}}</ref> |
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For the referral scheme to perform as envisaged by the UK Government, the businesses affected must give formal permission to the bank to pass on their information to [[Platforms (computing)|platforms]]. Business owners have expressed concern and confusion as to how the referral scheme will perform in practice<ref name=":1" /> |
For the referral scheme to perform as envisaged by the UK Government, the businesses affected must give formal permission to the bank to pass on their information to [[Platforms (computing)|platforms]]. Business owners have expressed concern and confusion as to how the referral scheme will perform in practice.<ref name=":1" /> |
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== Concerns == |
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Concerns have centred around the high-[[ |
Concerns have centred around the high-[[interest rate]]s that are charged by alternative finance providers,<ref name=":1">{{Cite web|url=http://www.bankofengland.co.uk/publications/Pages/speeches/2015/851.aspx|title=UK business finance since the crisis – moving to a new normal? - speech by Ian McCafferty {{!}} Bank of England|website=www.bankofengland.co.uk|access-date=2016-11-16}}</ref> how [[confidential information]] will be treated by the designated platforms who are small [[Startup company|start-up]] businesses and the possibility of being contacted by a number of unknown companies who have had access to confidential business and financial information.<ref>{{Cite news|url=http://uk.businessinsider.com/fintech-could-cause-bankers-to-lose-jobs-2015-9|title=Fintech could trigger a tsunami of banking layoffs|newspaper=Business Insider|access-date=2016-11-16}}</ref> Web sites such as DesignatedPlatforms.com<ref>{{Cite web|url=http://designatedplatforms.com/|title=Designated Platforms|website=Designated Platforms|language=en-US|access-date=2016-11-16}}</ref> have been set up to track, rank and discuss how each of the platforms performs to address such concerns. |
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== Background == |
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The idea of the bank referral scheme was advocated by the [[Liberal Democrats]] under [[Nick Clegg]] with the former Liberal Democrat [[Secretary of State for Business, Energy and Industrial Strategy|Business Secretary]], [[Vince Cable|Sir Vince Cable]] hinting at it in March 2014.<ref>{{Cite web|url=http://www.altfi.com/events/altfi_europe_summit_2014|title=AltFi Europe Summit 2014|last=|first=|date=|website=|publisher=|access-date=}}</ref> The then [[Chancellor of the Exchequer]], [[George Osborne]] announced in August 2014<ref>{{Cite web|url=http://www.altfi.com/article/0345_referral_system_confirmed_as_government_plans_for_uk_to_rule_the_world_of_fintech/|title=Referral System Confirmed as Government Plans for UK to Rule the World of Fintech|last=|first=|date=|website=|publisher=|access-date=}}</ref> the scheme; after a five-month industry consultation selected [[British Business Bank]] (the UK's state development bank) to run the assessment process to recommend three designated finance platforms on behalf of [[HM Treasury]].<ref>{{Cite web|url=http://british-business-bank.co.uk/finance-referral-platforms-policy/|title=British Business Bank: Finance Platforms}}</ref> |
The idea of the bank referral scheme was advocated by the [[Liberal Democrats]] under [[Nick Clegg]] with the former Liberal Democrat [[Secretary of State for Business, Energy and Industrial Strategy|Business Secretary]], [[Vince Cable|Sir Vince Cable]] hinting at it in March 2014.<ref>{{Cite web|url=http://www.altfi.com/events/altfi_europe_summit_2014|title=AltFi Europe Summit 2014|last=|first=|date=|website=|publisher=|access-date=}}</ref> The then [[Chancellor of the Exchequer]], [[George Osborne]] announced in August 2014<ref>{{Cite web|url=http://www.altfi.com/article/0345_referral_system_confirmed_as_government_plans_for_uk_to_rule_the_world_of_fintech/|title=Referral System Confirmed as Government Plans for UK to Rule the World of Fintech|last=|first=|date=|website=|publisher=|access-date=}}</ref> the scheme; after a five-month industry consultation selected [[British Business Bank]] (the UK's state development bank) to run the assessment process to recommend three designated finance platforms on behalf of [[HM Treasury]].<ref>{{Cite web|url=http://british-business-bank.co.uk/finance-referral-platforms-policy/|title=British Business Bank: Finance Platforms}}</ref> |
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The scheme which was included in the Small Business, Enterprise and Employment Act 2015 <ref name=":0" />was given [[Royal assent|Royal Assent]] in March 2015. The implementation of the scheme was slowed down by a multitude of logistical problems such as how and when a bank should refer a business to the alternative finance sector. |
The scheme which was included in the Small Business, Enterprise and Employment Act 2015 <ref name=":0" /> was given [[Royal assent|Royal Assent]] in March 2015. The implementation of the scheme was slowed down by a multitude of logistical problems such as how and when a bank should refer a business to the alternative finance sector. |
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The bank referral scheme was launched on 1 November 2016<ref |
The bank referral scheme was launched on 1 November 2016<ref name="gov.uk"/> after a further two-month delay.<ref>{{Cite news|url=http://www.altfi.com/article/2261_bank_referral_scheme_to_go_live_early_next_quarter|title=Bank referral scheme to go live early next quarter - AltFi News|newspaper=AltFi|access-date=2016-11-16}}</ref> |
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==References== |
==References== |
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[[Category:Building societies]] |
[[Category:Building societies]] |
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[[Category:Loans]] |
[[Category:Loans]] |
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Revision as of 05:41, 17 November 2016
The UK government-mandated bank referral scheme (Designated Platforms) was created by the Small Business, Enterprise and Employment Act 2015[1] to allow the UK government to track businesses and their requests for business finance.[2] The scheme was launched in November 2016 after more than two years of delays.[3]
Businesses who have been unsuccessful in a credit application process with a bank will be asked for their permission to have their financial information passed to designated finance platforms, who can contact the business in a regulated time-frame.
The three designated finance platforms selected are Funding Options, Funding Xchange and Bizfitech.[4]
How the Referral Scheme works
The bank referral scheme imposes a statutory duty on selected UK high street banks to pass on businesses who have been unsuccessful in applying for finance to the three designated alternative finance platforms, who will then phone the businesses in order to refer them to alternative finance providers.[5]
For the referral scheme to perform as envisaged by the UK Government, the businesses affected must give formal permission to the bank to pass on their information to platforms. Business owners have expressed concern and confusion as to how the referral scheme will perform in practice.[6]
Concerns
Concerns have centred around the high-interest rates that are charged by alternative finance providers,[6] how confidential information will be treated by the designated platforms who are small start-up businesses and the possibility of being contacted by a number of unknown companies who have had access to confidential business and financial information.[7] Web sites such as DesignatedPlatforms.com[8] have been set up to track, rank and discuss how each of the platforms performs to address such concerns.
Background
The idea of the bank referral scheme was advocated by the Liberal Democrats under Nick Clegg with the former Liberal Democrat Business Secretary, Sir Vince Cable hinting at it in March 2014.[9] The then Chancellor of the Exchequer, George Osborne announced in August 2014[10] the scheme; after a five-month industry consultation selected British Business Bank (the UK's state development bank) to run the assessment process to recommend three designated finance platforms on behalf of HM Treasury.[11]
The scheme which was included in the Small Business, Enterprise and Employment Act 2015 [1] was given Royal Assent in March 2015. The implementation of the scheme was slowed down by a multitude of logistical problems such as how and when a bank should refer a business to the alternative finance sector.
The bank referral scheme was launched on 1 November 2016[4] after a further two-month delay.[12]
References
- ^ a b Small Business, Enterprise and Employment Act 2015 2015 c. 26PART 1Financial information about businessesSection 5
- ^ "Goverment Responses Platforms for rejected SME finance" (PDF).
- ^ "Bank referral scheme goes live - AltFi News". AltFi. Retrieved 2016-11-02.
- ^ a b "New matchmaking service for small businesses looking for finance".
- ^ "Banks to be forced to increase competition in SME lending". Telegraph.co.uk. Retrieved 2016-11-16.
- ^ a b "UK business finance since the crisis – moving to a new normal? - speech by Ian McCafferty | Bank of England". www.bankofengland.co.uk. Retrieved 2016-11-16.
- ^ "Fintech could trigger a tsunami of banking layoffs". Business Insider. Retrieved 2016-11-16.
- ^ "Designated Platforms". Designated Platforms. Retrieved 2016-11-16.
- ^ "AltFi Europe Summit 2014".
- ^ "Referral System Confirmed as Government Plans for UK to Rule the World of Fintech".
- ^ "British Business Bank: Finance Platforms".
- ^ "Bank referral scheme to go live early next quarter - AltFi News". AltFi. Retrieved 2016-11-16.