Small firms have become crippled due to impersonal banks that have failed to develop relationships with their clients said Vince Cable. The Business Secretary said entrepreneurs that are cash strapped need help to expand but are regularly told that the computer said no which is a reference to the series Little Britain and a specific catch phrase.
In the series the computer rejects all the apps it is given which is not dissimilar to how the small businesses are treated by the banks. Mr. Cable in his latest attack on the finance giants said the traditional relationships that the bank manager had are virtually nonexistent. He says what was once a personal touch was now a decision from an anonymous computer.
Relationship banking has gradually been pushed aside and that close relationship no longer amounts to much. Some are trying to bring it back, but at a time like now, there is not the infrastructure in place to assess and process the risk in small businesses.
Tory MP Simon Kirby said many regularly approach him and say they are fed up with the banks. Many times they do not even find out if the computer said yes or not since they are not even allowed in the door.
The biggest banks pledged to lend over £19 billion to small firms from January to March in the deal that was dubbed Project Media. But last months official figures by Bank of England show where only £17 billion was advanced a shortfall of over £2 billion.
He said he was disappointed and insisted banks, if the target was not met by year’s end, would be punished. He also said other measures may have to be implemented and one may be raising the banks tax bills.
He singled out Lloyds which 43% is owned by the taxpayer for doing much better than many of is competitors. It has met its targets for lending and has put small business lending on each agenda of its board meetings each month. Trust needs to return between the banks and their customers if this initiative to help small firms will work.