Stephen Jones, CEO of UK Finance
The BankingFutures project was launched by Meteos and Leaders’ Quest in 2014 to bring together representatives from civil society and regulators with senior banking executives, investors and industry experts to work on reforming the banking sector. The project looks to address:
- How banks can better contribute to the real economy,
- How communication and dialogue can be improved between banks, investors and other stakeholders to enhance banks’ ability to deliver long-term value.
Great progress had been made so far, with the first phase of the project concluding in the publication of Banking on Trust: Engaging to Rebuild a Healthy Banking Sector.
Highlights include changes to the SME Finance Monitor survey to track the SME lending journey, increasing awareness of Post Office provided services to SMEs, optimising the government’s Platform Referral Regulations, working with the Lending Standards Board on implementing new extended standards and with the APPG on Fair Business Banking to review SME lending contracts.
As strategic partners of The BankingFutures project, UK Finance welcomed stakeholders involved in BankingFutures to our offices in Angel Court last week, to provide an update on the progress made so far. Highlights include changes to the SME Finance Monitor survey to track the SME lending journey, increasing awareness of Post Office provided services to SMEs, optimising the government’s Platform Referral Regulations, working with the Lending Standards Board on implementing new extended standards and with the APPG on Fair Business Banking to review SME lending contracts.
It is also our intention to commission an independent review to evaluate all Alternative Dispute Resolution options for SMEs and to provide recommendations.
As part of the initiative, an Action Group was set up to work on SME lending. It sought to identify actions that would forge stronger links between the financial system and the small and medium enterprise (SME) sector of the economy. The concluding report Banking Small Businesses published in July this year, only days after UK Finance opened its doors, outlined recommendations for both banks and government.
In summary the recommendations focus on:
- More precise data and more narrative information on SME Lending
- Strategies to Address Local and Regional SME Needs
- Measures to Support SME Access to Advice and Improve Investment Readiness
- New Internal Protection Thresholds and Procedures
- New Redress Measures for Small Businesses
A second Action Group was charged with exploring how to reintroduce a long-term culture of investing in banks, in partnership with Investor Forum. Its concluding report Pathway to Long-Term Value also published in July 2017, identified five milestones for improving the dialogue on the determinants of long-term value between banks and their investors and other stakeholders.
The first of these milestones focused upon establishing interest on the part of investors in information with a longer time horizon. Andy Griffiths, Investor Forum, opened this part of our discussion at our event last week, reporting back on a survey undertaken following on from the project.
Four clear signals emerged from the survey:
- Non-financial information is very important to understand long-term value
- An important challenge for banks regarding the quality and consistency of that information
- A clear message that banks should reduce the emphasis on quarterly reporting
- An appetite to focus communication through a two-page summary of long-term value drivers.
In discussing the milestones, we confirmed our plans to improve the impact of Strategic Reports by seeking cross-industry agreement on core elements that could be drawn into a short summary, with specific indicators, as recommended by the report. In addition to fitting with what we heard from investors, this also sits within governmental plans for enhanced Section 172 director responsibilities and greater emphasis being placed on strategic reporting.
In our role as strategic partners, we will endeavour to progress the BankingFutures initiative through continued discussion with stakeholders, as we advance the recommendations of the scheme.