More competition needed to improve access to finance for SMEs


The dominance of two high street banks – RBS and the Bank of Scotland - should be broken up by establishing new sources of credit for small and medium sized businesses (SMEs), according to a report by the Scottish Parliament’s Economy Committee.

Following a short, focused inquiry on access to finance for SMEs, the Committee found that to create genuine choice in the market, we need those with a different range of products than the current providers and not more of the same.

RBS was also encouraged to implement the findings of the independent lending review. MSPs called on the publicly owned institution to demonstrate that it truly has adopted a process of full devolution of lending decisions to localised branches and relationship managers.

The inquiry also considered alternative sources of funding and concluded that the two enterprise agencies and Business Gateway need to have a far better knowledge of alternative finance models so they can better advise businesses on alternatives to traditional bank lending.

Convener of the Economy, Energy and Tourism Committee, Murdo Fraser MSP said:

“The problems of bank lending following the recession are well rehearsed. Whilst the picture has improved slightly, it remains one of the biggest issues facing small businesses.

“Whilst the two biggest lenders in the market have said that they are open for business, we need greater competition and not more of the same to unlock the potential of thousands of Scottish businesses.

“It is also not good enough for our publicly funded enterprise agencies to be falling behind on advising business on what other routes of financing are available. They should be leading the way to make sure businesses in Scotland get the finance they need to grow and expand.”


The Royal Bank of Scotland (RBS) and the Bank of Scotland (BoS) together accounted for some 70 per cent of business lending in Scotland in 2012.

The Committee conducted three evidence sessions which included a number of witnesses, including representatives from organisations including the Royal Bank of Scotland, Bank of Scotland, BrewDog, Federation of Small Business in Scotland, the Scottish Investment Bank and twintangibles. 


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