The Bank Referral Scheme Has Made Zero Impact


The alternative finance industry was given a boost last year when the UK Government mandated that loans applications rejected by high street lenders must be referred to alternative finance providers. The Bank Referral scheme has so far failed to make any impact and now, just months after the introduction of this finance match-making service, HM Treasury has revealed that it has appointed Professor Russel Griggs to review the scheme and gauge its effectiveness.

Commenting on the announcement, Stuart Law, CEO of Assetz Capital said “Since the scheme started back in November, it’s made very little impact and it comes as no surprise that it’s now being reviewed. We have not seen a significant uptick in referrals and welcome the review.”


This sentiment was shared by John Davies, CEO of the Just Loans Group and chairman of the Association of Alternative Business Finance (AABF), who believes his company had received negligible business through the scheme.


“Our experience is generally echoed by all members of the [AABF] and it is tempting to use the considerable experience of our membership to start suggesting solutions. However, we need to understand if the blockages [and] issues are with the banks, the platforms or simply a lack of demand from SMEs.”


Industry participants are hoping that the review will shine the light on poor-performing banks that are failing to refer small businesses adequately. The Federation of Small Businesses wants the scheme to become transparent and hopes the government will publish data about the referrals. It says greater accessibility of lending figures will demonstrate the efficacy of the scheme and more broadly, it wants a review of small business lending data disclosure to bring much-needed transparency in traditional bank finance.


Most commentators welcome the review but believe that a complete redesign is required to make the scheme work effectively.

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