"The issues of the last decade have shown there is a need for greater protections for business borrowers"
Developed with input from the All Party Parliamentary Group on Fair Business Banking, the SME Alliance and the Federation of Small Businesses, the Lending Pledge commits that TSB will:
• Be fair and transparent in everything it does, keeping the customer informed as to the course of action it is taking and why.
• Give customers reasonable time to return their business to health.
• Not raise loan margins on existing facilities if a business enters into financial difficulty.
• Not default a business if it is up-to-date on its loan payments, but a valuation change impacts a covenant.
• Not demand full repayment or remove an overdraft unless a business has breached its terms of lending.
• Not run their business support unit as a profit centre and not incentivise their partners for additional income earnt on accounts in business support.
TSB also promises to actively campaign for greater protection to be put in place for business borrowers across the industry.
The Bank has already been announced as part of the Incentivised Switching Scheme announced in December, alongside bidding for a grant from the Capability and Innovation Fund which is designed to boost competition in the business banking market.
Richard Davies, TSB’s SME banking director, commented: “Small businesses need firm commitments to ensure they get fair treatment when they need it most. That is why we are offering a new Lending Pledge. The issues of the last decade have shown there is a need for greater protections for business borrowers, and we hope that the rest of the business banking industry will follow suit.”
Kevin Hollinrake MP, co-chair of the APPG for Fair Business Banking, added: “It is refreshing to see a financial institution breaking from the crowd and recognising the need for extending the regulatory perimeter to include business customers. Most businesses simply do not realise that they have very few rights when they borrow money from their bank and we hope that these pledges will help to raise awareness of this fact.”
