Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Thanks Theosus - outlines Lloy stuck to established customers only
Given the obvious chances that mass fraud would befall these Government backed loans, it would have made sense for the Government, on this occasion, to have insisted that all banks on the list of funders to complete due diligence and open business accounts for all business's seeking government loans.
That could have offered at the least, an additional layer of protection for fraudsters to have to surpass, that wasnt there if loans just left banks and went into personal bank accounts elsewhere.
Eightyeight88, I agree 100% with your comments. However, I am concerned over Lord Agnews comments; "Agnew on Monday claimed the BBLS had entered a “new and dangerous phase” because banks were able to claim cash from the state loan guarantees. He demanded the government stop paying out until there was “clarity” on what lenders were doing to tackle fraud. “An avalanche of claims on the 100 per cent state guarantee has already started,” he wrote in an FT op-ed." The banks were stitched up with the PPI mis-selling scandal, will they make a scapegoat of the banks for not showing due diligence when assessing applicants applying for the loans, and make them liable for the loans if they are deemed not to have made necessary checks before handing out the loans. The large cash positions the banks are currently sitting on might be seen to be fair game to cover bad loans in these circumstances.
the whole thing reeks of incompetence ..however the pandemic was a first (and hopefully the last) and some latitude has to be given to the blind panic that was going on to stabilise the economy......however examples like the manchester drug dealer getting £50k may not be an isolated case....un believable. ..i hope the govt doesnt turn round at some point and blame the banks for incompetence and pull the guarantee ...
Despite attracting criticism at the time, So glad Lloyds restricted loans to existing customers only
Part 2 from Financial Times:
It was self certified and required no credit checks. Officials say the scheme was a success, given the urgent need to get cash to businesses struggling to survive in the first lockdown. At the time the Treasury was under pressure to act after early versions of the scheme were criticised for being too slow to help small businesses. With no interest payments for a year, the programme proved wildly popular with small businesses, with about a quarter of all UK companies applying for loans totalling almost £47bn. However, the cursory checks also made it a magnet for fraudsters. About £1.3bn, or 2 per cent of the scheme, has been defaulted on by borrowers unable to pay the money back. The taxpayer is facing total losses of up to £17bn from defaults, fraud and error. The predicted losses make the BBLS the most costly of the government’s Covid business support schemes. Fraud and errors in the furlough, self-employed income support and Eat Out to Help Out schemes total about £5.8bn. Of this, Viscount Younger of Leckie told peers on Tuesday, HMRC expected to recover between £1.3bn to £1.5bn. Charles Roxburgh, permanent secretary at HM Treasury, told the public accounts committee this month that officials knew “this would be an expensive scheme by its very design?.?.?.?we were aware of the fraud risk. Ministers were advised of that”. But he added: “Given that the other loan scheme wasn’t delivering money fast enough to small businesses, it was judged appropriate to go ahead.” Cases of BBLS fraud are starting to reach the courts. This month, a judge in Manchester called for a probe into how a drug dealer and car thief with 48 convictions was given a £50,000 loan. “The most basic of checks would have revealed the fraud,” he said. In a separate case a few days earlier, two men in Yorkshire were banned as directors after claiming £50,000 loans. In one instance, the insolvency service found that a company that claimed an annual turnover of £200,000 was actually making less than £700 a month. According to a Freedom of Information Act request published by the Insolvency Service this week, 9,733 companies that entered insolvency between May 2020 and October 2021 had taken out loans from the scheme. The British Business Bank said it had “ensured that key counter-fraud measures consistent with the self-certification design of the scheme were in place from the outset”. It added that £2.2bn of fraud had been prevented as a result. The Treasury said more than £100m had been invested in a taxpayer protection task force of nearly 1,300 staff, who were expected to recover an additional £1bn. But one Whitehall insider said there was likely to be fresh questions over whether more could be done. “Can we raise our efforts? Where are the weaknesses? There is a clear challenge here.”
From todays Financial Times:
UK banks fear their reputation could be unfairly tarnished over accusations that they handed out billions to fraudsters in a state-backed coronavirus business loan scheme. Lord Agnew, minister responsible for counter fraud in the Treasury and Cabinet Office, resigned in the House of Lords on Monday, saying he could no longer defend the government’s record on tackling fraud in the bounce back loan scheme, which was designed to save small businesses at risk from pandemic lockdowns. Agnew accused officials at Treasury, the Department for Business, Energy and Industrial Strategy and the British Business Bank of “woeful” oversight and “schoolboy errors” in the scheme. But his pointed criticism of the UK’s banks, which he accused of having taken about £1bn to cover defaulted loans under the fully guaranteed scheme, has sparked alarm in the industry. Senior bankers fear they are being scapegoated for a programme drawn up in haste by Treasury officials during the first Covid-19 lockdown in 2020. “I am beyond words. People were working every hour god sent to find solutions,” said one senior UK bank executive. “Hopefully common sense will prevail, but if it doesn’t I have literally told the Treasury and Financial Conduct Authority in meetings: ‘I hope nobody has a short memory around here folks, I have every meeting minuted’, recording everything the government said like ‘get these done, get these out, cut corners’, to protect myself.” A manager at a different lender said it had flagged the potential for a wave of fraud. “The government is starting to worry about the scheme now because at the end of the day they wrote this cheque, as we keep reminding them.” Another executive said banks were worried about the risk to their reputations after having spent the past decade recovering from complaints about how they treated small businesses in the 2008 financial crisis. Agnew on Monday claimed the BBLS had entered a “new and dangerous phase” because banks were able to claim cash from the state loan guarantees. He demanded the government stop paying out until there was “clarity” on what lenders were doing to tackle fraud. “An avalanche of claims on the 100 per cent state guarantee has already started,” he wrote in an FT op-ed. One senior banker rejected Agnew’s criticism, saying banks needed to meet a standard for fraud prevention in order to trigger the guarantee. The debate over the loan scheme continued in the House of Lords on Tuesday, with one peer asking again whether the guarantee should be revoked, while others questioned the scale of the fraud. Officials at the business department estimate that £4.9bn of BBLS funds could be lost, depending on the success of efforts to recover money from fraudsters. But the National Audit Office criticised attempts to prevent fraud as inadequate and under-resourced, and risked allowing smaller fraudsters falling through the net. The BBLS, launched in May 2020, guaranteed loans of up to £50,