Homepeer to peer lendingBounce back loan report ‘inconclusive’

Bounce back loan report ‘inconclusive’

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The British Business Bank (BBB), which handled the government’s bounce back loan scheme, is under fire again for a delayed publication on lender performance, which is expected to deliver only “limited and inconclusive data”.

According to The Times, the state-owned BBB is preparing a protracted lender-by-lender performance report on the £47bn scheme but has warned the data “should not be regarded as definitive nor conclusive as to the performance of the schemes”.

A response to a Freedom of Information (FOI) request by The Times revealed that the bank has agreed with undisclosed participating lenders that the public must be warned not to make “incorrect comparisons/conclusions” by comparing performance.

A spokesperson for the state bank told the paper: “Given the size of the schemes, the numbers of loans, and the speed at which they were offered and drawn down, data collection remains fluid and subject to refining and correction.”

It follows a report by The Times last week, which found via an earlier FOI request that the number of small businesses in arrears after taking out a government-backed bounce back loan is around 193,000, higher than previously claimed.

Cabinet Office minister Jacob Rees-Mogg is thought to be putting pressure on the BBB to release more extensive data.

Mogg may add a new dimension to the existing political row over the matter, which saw Treasury and Cabinet Office minister Lord Agnew of Oulton resign in January, having criticised the government over its handling of fraud cases linked to the Covid-19 loan schemes.

Six-year loans of between £2,000 and £50,000 were issued to small businesses between May 2020 to March 2021, at 2.5 per cent interest.

Lenders were guaranteed to get their money back, but the risk of default remained with the taxpayer, not the borrower.

Repayments were due after the first 12 months, with some extended by another six months under the Help To Grow scheme. However, between £4.9bn and £17bn has been estimated to have been lost due to fraud.

Meanwhile, The Times also reported that one in four bounce back loans issued by Starling are in arrears since June. The scheme average is understood to be one in eight.

A spokeswoman for Starling, told the paper: “We don’t know how or what the other banks are reporting, so it’s very difficult to make direct comparisons.”

Read more: Starling Bank eyes more lender acquisitions in 2022

The BBB’s report on lender performance is expected to excuse the current arrears figures by saying that lenders are at different stages of the recovery process; that banks may have experienced higher loss rates than peers despite abiding by the scheme rules; and that the number of claims on the taxpayer guarantee does not necessarily denote “the amount of fraud in a lender’s portfolio”.

Lord Agnew, who was an anti-fraud minister prior to his resignation, had singled out Starling for alleged anti-fraud failures in its administration of the scheme, which Starling and its chief executive Anne Boden have strongly denied.

The difficulty in accurately comparing lender performance is in part thought to be due to a failure to agree scheme-wide standards when it was launched.

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