RE: UK business loans written off by banks almost double to £356m as insolvencies quadruple16 May 2022 23:03
olr
An article I read in the FT in January after Lord Agnew resigned from the Government criticising how the Banks had been administering the scheme. I don't trust them. An extract from the article:
"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."
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