By Huw Jones
LONDON, June 16 (Reuters) - British banks need to accelerate
preparations for dealing with businesses unable to repay money
borrowed to bridge the coronavirus pandemic, the national
financial sector regulator said on Tuesday.
Over 800,000 businesses have taken out state-backed loans
worth around 34 billion pounds ($43 billion)under schemes
introduced by the government as lockdowns forced companies to
shutter temporarily.
Financial Conduct Authority (FCA) Chair Charles Randell said
some of the debt incurred will turn out to be unaffordable and
will need to be tackled fast to avoid dragging on recovery.
"Lenders will need to scale their arrears-handling functions
quickly, and invest in training and controls," Randell told an
online meeting with the chairs of Britain's banks.
"There needs to be an appropriate dispute resolution system,
and we are working with the Financial Ombudsman Service and the
Business Banking Resolution Service to ensure that there is
capacity to deal with the volumes we may see."
Banks were criticised for being slow initially in building
up capacity to dole out loans, sparking complaints from small
companies struggling to stay afloat.
"We can't allow this to become a replay of the 2008 crisis
where the treatment of some small business borrowers did such
serious damage to people and to trust in financial services,"
Randell said.
The pandemic's impact on markets has added to questions
about the value of some high cost and risky investment products,
including those sold through "long and expensive distribution
chains", he said.
"We will be saying more about the issue of high risk
investments in the near future."
There is also a need to "redesign the system" so that
"polluting firms" that break the rules pay for the consequences,
rather than being mutualised across the industry, he said.
($1 = 0.7908 pounds)
(Reporting by Huw Jones;
Editing by Andrew Cawthorne)
