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Law360, London (April 20, 2021, 1:59 PM BST) -- A parliamentary committee has written to Britain's biggest banks to question them about reports that small and midsized enterprises are struggling to open new accounts, suggesting that action might be needed to help businesses get access to their services.
HSBC UK Bank PLC, Lloyds Banking Group PLC and Barclays Bank UK PLC are among six banks asked about their practices by Mel Stride MP, chairman of the influential Treasury Committee. Stride has also asked NatWest Group PLC, Santander UK PLC and Metro Bank PLC to respond.
Stride wrote to the high street names, in a letter dated Monday, following reports in the media and from consumers that small and midsized enterprises, or SMEs, are experiencing difficulties when they attempt to open new accounts. Smaller businesses will continue to need vital support from financial institutions as the country starts to recover from the pandemic, the Conservative MP said.
"It's critical that these institutions are adapting to the requirements of SMEs as the economy starts to pick up," he told the banks' executives. "The committee wants to know more about the state of the business current-account market and whether action needs to be taken to mitigate the difficulties faced by SMEs."
MPs want to know whether banks are restricting access to applications, what changes they have made and whether they plan to withdraw from the market for small businesses. The cross-bench committee also wants to know whether potential customers have faced longer waits to open new current accounts for their businesses since March 2020.
The banks were asked whether they have changed their criteria for opening such new accounts since then, and whether they have received more complaints than usual about customers being unable to open bank accounts.
A spokesperson for Metro Bank said the bank has been a champion of UK SMEs since the coronavirus pandemic, extending finance through government backed lending schemes. The lender is "currently open for business bank account applications" for single director and multi-director businesses, the spokesperson said.
HSBC, Barclays, Lloyds, NatWest and Santander have been approached for comment.
Small businesses in the United Kingdom hit by COVID-19 have turned to banks to get access to government-backed loans. Industry group UK Finance said in January that the finance sector has provided almost £71 billion ($99 billion) of funding to businesses under the lending programs.
But there have been reports of companies struggling to get their hands on the loans and concerns that they might not be able to repay the money. In February, a study by a technology solutions company said that just 63% of SMEs are confident in their ability to repay what they have borrowed.
--Editing by Ed Harris.
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