TSB offers greater protection for business borrowers
The move follows recent scandals at RBS and HBOS.
TSB has unveiled a package of measures that it claims will safeguard small business borrowers following a string of scandals that have blighted the banking sector.
The lender has pledged to support small and medium sized enterprise (SME) customers when they are in financial distress and protect them against unfair treatment and charges.
The move follows calls to bring in tougher SME lending regulation following scandals at the Royal Bank of Scotland and HBOS, which was acquired by Lloyds at the height of the financial crisis.
RBS’s now-defunct Global Restructuring Group (GRG) was accused of pushing small businesses towards failure in order to pick up assets on the cheap.
While fraud at HBOS’s Reading branch saw corrupt financiers jailed over a £245 million loans scam which destroyed several businesses.
Developed with the All Party Parliamentary Group on Fair Business Banking, lobby group SME Alliance and the Federation of Small Businesses, TSB has outlined six commitments that it has pledged to abide by and has urged others in the banking sector to follow.
They include fairness and transparency, giving customers time to return their business to health and not raising loan margins on existing borrowings.
In addition, TSB has pledged not to default a business if it is up-to-date on loan payments but a valuation change impacts a debt agreement, not to demand full repayment or remove an overdraft unless a business has breached lending terms and not to run its business support unit as a profit centre.
Richard Davies, TSB’s SME banking director, said: “The issues of the last decade have shown there is a need for greater protections for business borrowers, and we hope that the rest of the business banking industry will follow suit.”
Kevin Hollinrake, Conservative MP and co-chair of the APPG for Fair Business Banking, said: “It is refreshing to see a financial institution breaking from the crowd and recognising the need for extending the regulatory perimeter to include business customers.
“Most businesses simply do not realise that they have very few rights when they borrow money from their bank and we hope that these pledges will help to raise awareness of this fact.”
Bill Esterson MP, Labour’s shadow minister for business and international trade, added: “It’s good to see TSB is taking the lead in setting a minimum standard for business banking, but they shouldn’t have to.
“Under Labour, we will ensure all banks adopt the highest standards in treatment of SMEs.”
Last month TSB was one of 11 banks approved for RBS’s incentivised switching scheme that will encourage small business customers to ditch their RBS account for rivals.
The scheme is part the alternative remedies package that is a condition attached to RBS’s £45 billion Government bailout a decade ago aimed at boosting competition in the retail banking sector.