GOVERNMENT ADVISES BANKS TO NOT DELAY FUNDS FOR STRUGGLING UK FIRMS

Speaking at the government coronavirus briefing yesterday, business secretary Alok Sharma advised banks to do ?everything they can? to support struggling businesses, stressing that lenders should not withhold or delay business loans and funds (The Telegraph, £, B1). Mr Sharma said that the chancellor Rishi Sunak will make a further announcement in the next coming days regarding the coronavirus business interruption loan scheme (CBILS) (Sky News). Writing for the Evening Standard (p26), Simon English, senior city correspondent, comments that we will need banks to kick-start the economy, and that it will be harder for them to do this if their balance sheets are ?crippled by bad loans?.

Speaking on Sky News yesterday, Stephen Jones, CEO of UK Finance, said the banks are doing all they can to get money to businesses as quickly as possible.

?Lenders are working hard to get financing to all viable businesses who need it as quickly as possible, whether through the Coronavirus Business Interruption Loan Scheme if the business is eligible or by providing additional financial support through normal commercial arrangements where appropriate.

?CBILS was designed specifically to support those viable SMEs who cannot meet a lender's commercial lending requirements including where insufficient assets are available and lenders cannot use the scheme if they are able to lend under their normal criteria.

?As the Business Sectetary said today, this is a new scheme delivered at pace and there will be issues that need to be addressed. That is why we have been working closely with government since implementation to ensure the scheme can operate in the best way possible to get money to viable businesses that need it as quickly as possible.?

Meanwhile, the International Monetary Fund (IMF) has advised the government to buy up failed businesses to prevent workers from losing their jobs and enable a quick recovery once the Covid-19 crisis is over (The Telegraph, £, B2).

FCA PROPOSES TEMPORARY FINANCIAL RELIEF FOR CUSTOMERS IMPACTED BY CORONAVIRUS

The Financial Conduct Authority (FCA) has today proposed a range of targeted temporary measures to help people who are struggling with loan repayments and overdraft fees amid the coronavirus pandemic (BBC News). The measures will include waiving interest charges on credit cards or loans and providing a £500 interest-free buffer on overdrafts (Daily Mirror, online only).

Responding to the consultation announcement, Stephen Jones, CEO of UK Finance, said:

?All lenders are ready to support their customers during this unprecedented situation, with many individual firms already helping with relief on overdrafts and other unsecured debts.

?We have been talking with the regulators about the need to change the rules to enable lenders to provide further help for their customers, where it is needed most. The proposed changes to the FCA's rules should enable lenders to deliver further support to their customers and we will continue to work with the regulator as part of the industry's commitment to get the country through these difficult times.

?Lenders want to ensure that customers are both helped with their current financial circumstances and able to manage their borrowing when the crisis has passed. It is critical that the FCA's proposals do not disrupt the provision of credit to borrowers and takes account of the business models of all credit providers, including those outside the mainstream market.

?Firms have been taking a record volume of calls due to Covid-19 while facing the same pressures on staffing as the rest of the country. Where possible we would therefore encourage customers to check their lender's website first to see if it answers their question, and consider getting in touch via online chat, social media and online banking and mobile apps.?

NEWS IN BRIEF

According to a report by S&P Global, Britain's measures to support its economy through the pandemic will push the country's debt-to-GDP ratio over 90 per cent this year (Reuters).

The COP26 climate change summit, which was due to take place in Glasgow in November, has been postponed for a year (Sky News).

Jonathan Athow, director-general of economic statistics at the Office for National Statistics (ONS), has warned that the coronavirus outbreak is causing difficulty in collecting data as they are unable to use their normal survey methods (FT, £, p2).

Mervyn King, the former Bank of England (BoE) governor, has advised ministers to develop an exit strategy for the Covid-19 lockdown (The Times, £, p37, print only).

The Institute for Fiscal Studies (IFS) has warned that two million self-employed people will not be financially supported by the government, as they do not earn enough or have only started working for themselves within the past year so will not be eligible for wage subsidies (The Guardian, p31).

According to Savills, the Treasury may lose almost £5 billion in stamp duty, a fall of between 40 per cent and 56 per cent, due to the coronavirus dampening property sales and prices (The Times, £, p2, print only).

COVID-19 - THE LATEST

UK Finance responds to FCA proposals on financial relief for customers impacted by Covid-19
1 April 2020

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