Government urged to level the playing field among UK lenders
The government has been urged to level the playing field between banks and non-bank lenders, to support less affluent consumers during the pandemic and protect London’s crown as a global fintech hub.
Analysts at brokerage Goodbody highlighted the benefits of alternative lenders, not only to deliver government funding during the pandemic but also from the perspective of financial inclusion.
“While non-banks serve an important function in the context of the provision of credit to prime customers, it is also critical to note that less affluent customers are heavily dependent on them, i.e. the segment of society that is most adversely impacted by Covid-19,” Goodbody said in a research note.
The analysts said that the government needs “to ensure that this subset of customers continues to have access to credit rather than falling into the arms of loan sharks”.
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“Of course any arrangement which would see non-banks benefit from government funding (irrespective of how it is channelled) would be highly constructive in the context of mitigating against this very real risk – and would mark some effort at some levelling the playing field for UK lenders, with practically all supports extended to the lending industry thus far directed towards the banks as far as we can see,” Goodbody said.
“Indeed, if these players are going to continue to be disadvantaged in terms of funding supports, the serious question beckons as to whether the space should actually have been regulated to begin with (to avoid the ‘blow-up’ that we will see if they remain unsupported).”
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The research also noted that the UK is “far behind the curve in supporting alternative lenders” compared to other countries such as Australia and the US.
“I the non-bank segment remains unsupported, there will be casualties in the form of failing businesses as well as serious questions regarding London’s position as a fintech capital in my view,” the research added.
The Goodbody comments follow the launch of Peer2Peer Finance News’ ‘Back Our Industry’ campaign, which calls upon the government to make use of peer-to-peer lending platforms in deploying emergency funding to small businesses and housebuilders.