David Wylie, Director of LendingMetrics, thinks it is time for the industry to stand up to the clearing banks and their hostile approach to challenger lenders.
Compel UK banks to provide a bank account to legally trading UK businesses
As director of an Open Banking platform, my customers and prospective customers are often small to mid-sized lenders involved in HCST lending, motor finance, guarantor lending and other forms of niche finance.
And a common complaint that they all have - and one which crops up with predictable regularity in conversation - is the clearing banks.
They find the main clearers very difficult to do business with.
I have lost count of the number of finance providers who have told me that they are finding it impossible to open bank accounts, which they obviously need to deposit customer money and pay funds out. The banks don’t give any reason why they are turning them down, but it seems awfully convenient that they are essentially preventing potential competitors from launching.
The businesses they are running are wholly legitimate and do not require any funding, just a business current account.
Because of this increasingly common complaint, I have been involved in starting a petition that demands government action against High Street lenders.
Lodged at https://petition.parliament.uk/petitions/244168, it alleges that some clearing banks are systematically discriminating against challenger start-ups by refusing to open new accounts for them.
Those that are signing it all agree that there is a growing number of non-mainstream lenders who are being turned down for accounts - despite meeting all the usual requirements and not requiring finance.
The petition states that the number impacted by this issue suggests that the problem has now reached a stage where it is anti-competitive.
We want the matter referred to the Competition & Markets Authority so that it can investigate whether clearers are using their dominance to prevent competition from those often looking to offer consumers credit in new and innovative ways.
Without a business bank account, it’s very difficult to run any sort of business, let alone a new lender. The big clearers know this and may be cynically stifling competition by turning down account applications from wannabe lenders.
Signatories question on what possible grounds the applications are being rejected, when they are from FCA-authorised and comprehensively-regulated entities.
They would like the government to make it mandatory for High Street banks to provide basic clearing facilities to any new start-up.
This is of systemic importance to the UK economy. It is restricting new business growth, because you can’t really do much without a clearing account. You certainly won’t take off as a new business without one.
We would like to establish the principle that, providing you are trading legally and (where applicable) regulated, you have the right to a bank account.
It should not be discretionary: it should be a right.