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Global law firm Kennedys is calling on the financial sector and SMEs to work together to create a new culture of entrepreneurial spirit, following the recent FCA announcements.
In the summary of its Skilled Person report, the FCA acknowledged the damage done to small business owners by RBS’ GRG division, and commercial law experts at Kennedys see this as an opportunity to move forward and help SMEs bank with confidence once again.
Alison Loveday, partner at Kennedys, said: “The British economy needs a strong financial sector more than ever, and while the FCA findings won’t make up for the damage done in the past, it is now time for SMEs and banks to work together in a more efficient way.
“I believe that this means acknowledging the limited role the FCA has in commercial banking arrangements, meaning banks have a role to play in sitting down with those who represent SMEs and looking at how to manage risk in these uncertain times, while ensuring we get entrepreneurs the support they need.”
The FCA summary recommends that the FCA work with government to ensure there are adequate protections put in place for less sophisticated SMEs, and that a new code is examined that banks and SME customers could both work to.
Loveday added: “I believe a new commercial banking code would help unlock financial solutions for many SMEs, but it is important successful and larger SMEs are not excluded. If the focus of the new code isn’t ambitious enough, many entrepreneurs and small to medium sized businesses will find themselves trapped in a grey area, and problems could arise again.
“The key is to find financial solutions that manage risk for lenders, while reflecting the more innovative nature of sectors which are becoming increasingly important to the modern UK economy, such as science and technology. In this regard, I believe the UK has a real opportunity to rejuvenate its approach to SME banking.”