P2P lending to form part of inquiry into SME finance

POLITICIANS are going to consider the availability and uptake of peer-to-peer lending as part of an inquiry into finance for small-and-medium-sized enterprises (SMEs).

The Treasury Select Committee of MPs will evaluate the state of the SME finance market and will consider funding options including banks, P2P lenders and crowdfunding, as well as the level of competition and any sources that businesses avoid.

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The inquiry will also consider if there are lessons to be learned from the scandal surrounding Royal Bank of Scotland’s restructuring unit GRG. The Treasury Select Committee published the City watchdog’s damning report yesterday on the bank’s mistreatment of SME borrowers.

MPs will evaluate the ability of SMEs to resolve disputes and access fair and reasonable compensation when they borrow money and whether a new tribunal body is needed for SME banking disputes.

They will also assess the merits of the Financial Conduct Authority’s proposals for expanding SME access to the Financial Ombudsman Service, look at the current regulatory framework and protection for SME borrowers.

The inquiry is working alongside separate work from the business, energy and industrial strategy committee which is looking into government support for small businesses to boost productivity, and whether enough is being done to protect firms from unfair treatment by large companies.

Read more: P2P lending soars but SMEs generally wary of finance