OFT and FPB investigate bank lending

The FPB in particular has expressed concerns about the treatment SMEs and limited company contractors receive when they apply to their bank for a business loan. The FPB's research manager, Thomas Parry, said that the issue has received a huge amount of attention and caused a lot of debate.

He hopes that the results of the survey will give the OFT clear evidence that many small businesses have valid concerns about the banking industry in general.

The BBA recently published figures showing that business lending fell again in July and Parry believes this shows that the banks are unjustified in their approach to lending to smaller businesses.

The recent UK Business Confidence Monitor from the Institute of Chartered Accountants in England and Wales has also confirmed that UK firms and freelancers are struggling to obtain finance because of the strict lending criteria.

However, the FPB doesn't think that introducing lending targets for the banks is likely to lead to an improvement saying that if the banks are not ready to lend money they will find a way to get around targets.

Since the start of the recession the banks have restricted lending enormously and any loans that have been granted have come with high interest rates and excessive demands for security. The FPB thinks that the solution to improving the lending situation lies with the coalition scrutinising the banks' lending figures.

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