James Sherwin Smith, CEO of Growth Street, comments on the Bank Referrals Scheme:

Any measure that raises awareness of non-bank business finance and promotes greater competition should be welcomed.  However, while we know banks will now have to pass rejected applications for business finance to three designated platforms under this new scheme, it’s unclear what protections are in place to help businesses get the best deal from the proposed alternative finance providers.

  • Are the designated platforms required to display offers from all alternative finance providers, so businesses can see the whole market?
  • Given that designated platforms are paid commission by the finance providers, does this mean firms will be steered towards high cost finance providers that either pay the most commission or are the most likely to say yes?
  • If the designated platforms are competing with each other for each referral opportunity, will businesses be encouraged to make a quick decision, which could mean that key terms and conditions are glossed over?

Author: Dylan Jones

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