Lenders in talks with government about outsourcing the recovery of BBLS loans
Lenders are in talks with the government about outsourcing the recovery of billions of pounds worth of loans under the bounce back loan scheme (BBLS) to debt collectors.
According to The Times, government officials have contacted debt collection companies, including Arrow Global, to see if they could take on the loans to seek repayment, in return for a fee.
This is because banks believe the task would prove too big to handle themselves as the scheme has a huge flow of loans and predicted problems with repayments.
A report from the National Audit Office last week showed that a “very high level” of fraud risk among BBLS borrowers could result in government losses of between £15bn and £26bn.
As of 20 September, the scheme, which provides loans up to £50,000 backed by a 100 per cent government guarantee, had delivered £38.02bn to 1.3 million businesses.
Ideas being considered for recoveries include whether a new agency could manage the process, if the loans could be moved to a state-run bank, or setting up a panel of debt collectors signing up to a code of practice, with lenders maintaining responsibility for the treatment of customers.
This follows news that the Treasury is reportedly working with banking trade body UK Finance to develop a standard framework for dealing with BBLS borrowers in difficulty.
The government has already unveiled additional support for borrowers, including the option to extend government-backed loan terms from six to 10 years.
Earlier this month MPs demanded answers from the government after it was revealed that the British Business Bank had raised concerns to the Treasury about fraud and value for money of BBLS.
“At the Winter Economy Plan, we announced Pay As You Grow, which provides flexibility for firms repaying bounce back loans – giving them the option of extending the length of the loan from six years to 10, interest-only payment periods, and payment holidays,” a spokesperson from the Treasury said.
“We will continue to look at ways to support firms as they recover.”
