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Credit Sharing Scheme to Boost both the UK Fintech industry and UK SME Community
techUK welcomes HMT's New Credit Sharing Scheme, intended to remoce barriers to both challengers and alternative financiers
In a bid to stimulate more competition in the SME lending market, HMT last week launched the government’s new SME credit data sharing scheme, intended to remove barriers to both challenger banks and alternative finance providers in the SME lending market.
The scheme will stipulate the sharing of SME credit information (with their permission) by nine banks and three Credit Reference Agencies (CRA’s) equally with all finance providers. Access to finance for SME’s is often heralded as a key indicator of financial and economic health (it dried up for example following the Financial Crisis in 2008). For the benefits of innovation in the UK’s supply chain to be realised, and in order to enable the scale-up of the UK’s vibrant start-up scene (both in Fintech and more broadly) then the scheme is to be supported.
Under the new credit data regulations, HSBC, RBS, Santandar, Barclays, Clydesdale, The Bank of Ireland, Dansker Bank, the First Trust Bank and Yorkshire Banks will all be required to share credit data on their SME customers with designated CRA’s (Experian, Equifax and Creditsafe). The data must then be shared equally with all finance providers.
It will be interesting to note how the Sharing Scheme will interact with proposed API’s as set out recently in our seminar focus on Open Banking. The status quo has been sharing on an ad-hoc data for fear of competition concerns; with the credit sharing scheme, together with the proposed API’s, the outlook for our financial services landscape may be a far more open one.
Sharing will begin later this year following tests for both security and accuracy between banks and CRA’s.
