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Small business group criticizes FCA for ‘super-complaint’ approach


Britain’s leading small business representative body has criticized the City watchdog for its approach to a “super-complaint” over lenders’ personal guarantee demands.

Sky News has obtained a letter from Martin McTague, national chairman of the Federation of Small Businesses (FSB), addressed to the Financial Conduct Authority’s (FCA) competition chief, Sheldon Mills, in which he says the FCA risks ” losing the trust of small businesses.” by focusing too narrowly on the issue.

The “super-complaint” filed by the FSB – the first since it gained the power to do so a decade ago – came as small business owners were deterred from applying for a bank loan by requirements personal guarantee.

He said this could impact the wider UK economy by hampering business growth by reducing demand for credit.

In his letter to Mr Mills, sent last week, Mr McTague said the FCA’s “decision to fundamentally limit the scope of your evidence-gathering, and I’m afraid deliberately, excludes more than one million limited company directors in the UK who run their small businesses as incorporated companies.

“Personal guarantees, when used correctly, undoubtedly play a legitimate role in providing business loans,” he added.

“However, excessive reliance on personal guarantees when lending to limited companies can discourage investment, which in turn harms productivity.”

In its public response to the “super-complaint”, the FCA said its “ability to investigate and act is limited” by its regulatory scope.

Craig Beaumont, head of external affairs at the FSB, said: “The FCA’s decision to avoid the central issue – banks’ increasingly widespread reliance on personal guarantees for small UK businesses – is disappointing.

“This is reminiscent of historic banking scandals where every regulator in this area acknowledges that a problem exists, but quietly withdraws and leaves a large group of small business owners exposed – this time, nearly a million directors of limited companies.

“This is a ‘not me, Guv’ approach to regulation; a missed opportunity to improve the lending market.

“Small businesses deserve better and we are seeing what other options are available to us now that the FCA has said it is leaving the field.”


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