Labour MPs push banks to expand lending to small businesses and poorer communities

"Gareth Thomas, a former business minister, has tabled a 10-minute rule bill that would require banks to measure, disclose and improve how they serve underserved communities and smaller firms. The proposal mirrors the US Community Reinvestment Act, which obliges American banks to demonstrate how they support poorer areas and small enterprises. Thomas said the cost of living crisis had exposed deep weaknesses in access to affordable credit across the UK economy."

"Under the proposed legislation, banks would be required to report on their performance in reducing financial exclusion and improving access to finance for small and medium-sized enterprises. Regulators would then rate banks against those criteria, increasing transparency and applying pressure to improve outcomes. The bill would also compel banks to provide greater support for credit unions and community development finance institutions (CDFIs), which often specialise in face-to-face lending for small firms and individuals overlooked by mainstream lenders."

A proposed 10-minute rule bill would require banks to measure, disclose and improve how they serve underserved communities and smaller firms. The measure mirrors the US Community Reinvestment Act by obliging banks to demonstrate support for poorer areas and small enterprises. The cost-of-living crisis has exposed weaknesses in access to affordable credit across the UK economy, leaving millions of households and early-stage entrepreneurs without low-cost finance at critical moments. The bill would mandate reporting on efforts to reduce financial exclusion and improve SME finance, have regulators rate banks, and compel greater support for credit unions and CDFIs. The proposal has attracted backing from senior Labour figures, including committee chairs and former shadow chancellors.

Read at Business Matters