My Lords, I begin by repeating that the Government are completely committed to ensuring that SMEs can access the finance that they need to grow and create jobs. That is why the Bill seeks to build on the progress that the Government have already made on this agenda by bringing forward further innovative solutions to ensure that businesses can borrow and succeed. These include ensuring that alternative lenders can access credit information on smaller businesses to help them make lending decisions, and creating a new process for rejected smaller businesses to be offered the opportunity to use government-designated platforms that will help match them with alternative lenders. I will go through the amendments in turn.
Amendment 18A relates to providing financial advice as part of the finance platform offer. The new process provided for by Clause 5 has been designed to address a specific problem affecting smaller businesses’ ability to secure finance: namely, the evidence suggests that a smaller business will go straight to its main bank when it needs to borrow. If the banks says no, the business will give up its search there in the belief that it is already at the end of the road, as the noble Lord, Lord Mitchell, pointed out when we discussed an earlier amendment. However, alternative sources of finance for smaller businesses are coming on stream all the time.
The new process will address this problem by requiring banks to offer businesses that they reject for borrowing a new option alongside making an appeal or going to see a broker. To be clear, going to designated platforms will be a route that rejected businesses can take alongside or in tandem with existing avenues available to them, such as seeking professional advice. It is right therefore that the platforms process remains focused on addressing the issue of access to finance, which is where the real problem is. Of course, platforms will also be able to add additional services on top of the minimum legislative requirements—the Government want to give platforms freedom to compete with each other to offer the best possible service. My noble friend will therefore be pleased to know that the Government’s discussions with the industry have indicated that the majority of providers interested in securing designation intend to support advice for businesses as part of their value added services. However, we do not believe that adding the specific amendment that he suggests is something that we should contemplate at this point.
Amendments 19 and 24 relate to parliamentary scrutiny. I hope that noble Lords will be reassured by, and be happy about, the government amendments
that we have just debated, which accept the recommendation of the Delegated Powers and Regulatory Reform Committee to move to the affirmative procedure. The only thing I would say about Amendment 19 is that, in speaking to it, the noble Lord said something slightly different from what the amendment says. The amendment says that the Government should report on the number of times the regulations are used within a year. It does not say that it should be a broader report of the sort that he suggested in his speech. It is unlikely that these provisions will be used many times in a typical year, and the very fact that they will now be dealt with by affirmative resolution means that Members of both Houses will have a much clearer sense of exactly what has happened in any given year, because those who are interested in them will have been debating them.
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Amendment 21 relates to small businesses’ recourse to the Financial Ombudsman Service. The Government agree that the FOS is a vital source of protection for small businesses. That is why we are extending its remit as part of this legislation. Currently, when complaining about a CRA, a smaller population of businesses has recourse to the FOS than is the case for complaints about most financial services firms. Through this Bill, we are extending it so that all businesses that meet the general eligibility criteria for bringing a complaint to the FOS—currently microbusinesses with a turnover of less than €2 million and fewer than 10 employees—can complain to the FOS about any designated CRA. This will ensure that these small businesses have the same protections when dealing with a designated CRA as they do when dealing with a bank.
However, the Government do not think that it is appropriate to extend the remit of the FOS beyond its usual jurisdiction in this one isolated case, as suggested by the amendment. The limitation of the FOS’s jurisdiction to complaints brought by individuals or microbusinesses is set by rules of the Financial Conduct Authority. The FCA is due to consult soon on the jurisdiction of the FOS and the Government do not believe it is appropriate to pre-empt this in this legislation.
When considering complaints, the FOS has wide discretion to make the decision that it considers appropriate in each case, so we would not want to restrict its options as suggested by this amendment. If the FOS decides that it is appropriate for a CRA to rectify, block, erase or destroy data, it can make such a direction and its determinations can be enforced by a court. For those businesses that choose to take a CRA to court, this legislation has also created a specific right of action in relation to the data shared under the legislation. This provides a clear basis for the court to order correction or deletion of data and thereby make legal action simpler for the business concerned. It is, however, unlikely that it will ever come to this. The system that a CRA has in place for dealing with complaints by businesses will be a key criterion for continued designation. We would envisage that if a company felt that the data held about it were incorrect, it would go to the CRA as part of that complaints process and the CRA would correct it.