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05 February 2013

Chancellor and Business Secretary to address FSB Annual Dinner

Reference number: PR/2013/06

FSB News Release

PR 2013 06

Issue date: Tuesday 5 February 2013

Chancellor and Business Secretary to address FSB Annual Dinner

The Chancellor and the Business Secretary will both speak to guests tonight (5 February) at the Federation of Small Businesses (FSB) Annual Chairman''s Dinner. In his final speech as National Chairman, John Walker will tell delegates that during what has been a momentous week for the banking sector that he is pleased reforms to the banking sector seem to be moving in the right direction.

John Walker, National Chairman, Federation of Small Businesses, said:

"I am delighted that the Chancellor and the Business Secretary have taken the time out of their busy schedules to be able to address us today. It is a momentous week for the reform of the banking sector. Small firms have felt these practices more than most, in a lack of lending and the awful mis-selling saga which hit many small businesses. I am pleased that both the Chancellor and the Business Secretary have acknowledged the problems that small firms have faced at the hands of the banks.

"The drought of finance from what the Chancellor called ‘an oligopoly in the banking sector'' made clear what we have said for some time – that there must be more stability and competition in the sector if small firms are to get the finance they need.

"The reforms laid out yesterday in the Banking Reform Bill will go some way to achieving this. However, stability and competition are not mutually exclusive. Competition needs to come from more banks on the high street providing genuine choice for small firms and so we welcome the moves to open up payment services to make it easier for new banks to start and those small players to grow.

"This in turn will create a more stable environment, and when combined with the ringfence to secure the day-to-day operations mean that small firms will be able to keep running without fear. The Business Bank, which the Business Secretary will touch on I''m sure, also has a role in opening up non-bank finance to improve competition, but also helping small firms access finance which isn''t readily available from the banks.

"The FSA''s pilot redress scheme highlighted the severity of mis-selling with more than 90 per cent of complaints being upheld. This is a shocking figure and it is now up to the banks to make sure they give appropriate redress to those businesses that have been affected.

"I have heard first hand from members who have lost their life-times work because of these sharp practices and I hope that now we can start to draw a line under this episode. However, I fear that without the immediate suspension of payments when a business enters into the redress process that some small firms may find themselves in trouble.

"Our lobbying will not end with this report though. It is now up to the banks to contact their own customers and we want to see a concerted effort to do this so that small firms get the redress they deserve quickly.

"This is my final speech as National Chairman as my three year tenure ends at our National Conference in March. This followed nine years as Policy Chairman and in my 12 years I have seen the highs and the lows for small firms. It is great to see that so many people are embracing entrepreneurship and starting their own business and that small businesses are still the main driver of growth and creators of jobs. I hope that in the next 12 years, small firms are given a better environment to grow."

ENDS