Finance · 1 April 2016

Credit data sharing scheme launched to boost competition amongst small business lenders

Nine high street banks will need to release information as part of the government's credit data sharing scheme
Nine high street banks will need to release information as part of the government’s credit data sharing scheme
The government has launched its new small business credit data sharing scheme to make it easier for new banks and alternative lenders to check the creditworthiness of potential new business customers.

Going live on 1 April, the initiative requires a total of nine banks and three credit reference agencies (CRAs) to share credit information held on small firms with all providers of finance, with the authorisation of business owners. The scheme is designed to increase competition in the small business lending market and improve firms? chances of being able to access finance.

Larger banks have so far had greater access to more data than challengers and alternative lenders, and it is hoped the new measures will enable 100 finance providers to compete more effectively.

Under the terms of government’s credit information regulations, RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Banks, Bank of Ireland, Danske Bank and First Trust Bank in Northern Ireland will all be obliged to share credit data on SME business customers with the designated CRAs: Experian, Equifax and Creditsafe.

In an announcement, economic secretary to the Treasury Harriet Baldwin reaffirmed the government’s determination to encourage a competitive UK banking system that helps small businesses grow and that creates jobs.

‘small businesses are the backbone of Britain’s economy and it is right we make every possible source of finance available to them, said Baldwin.

the best way to deliver this is to increase competition in the banking sector and remove barriers to new sources of finance for small firms. Requiring banks to share data is a major structural reform that will level the playing field between banks and alternative providers, she added.



Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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