The CMA has published today its provisional decision on remedies as part of its ongoing investigation into the SME banking market.
As part of its proposed remedies, the CMA has “provisionally decided to make an order requiring all lenders that provide unsecured loans and overdrafts to SMEs to display on their websites rates showing the cost of these products up to the value of £25,000. These rates must be displayed in a form used under the existing (personal) consumer credit regime. This includes showing a representative annual percentage rate (APR) for unsecured loans.”
James Sherwin-Smith, CEO of alternative business overdraft provider Growth Street commented:
“Today's report by the CMA is a positive step forward towards the goal of the APR4SMEs campaign, which was started by Growth Street to make the disclosure of APR a mandatory requirement on all forms of commercial finance targeted at SMEs.
“However, the narrow scope of the CMA recommendation on APR is a source of disappointment, as it only covers small, unsecured loans, and website marketing. Therefore it continues to be the case that most finance products used by SMEs do not carry an APR, restricting firms’ ability to shop around and get the best deal, and allowing providers to hide the finance cost businesses ultimately pay via product complexity and related T&Cs.
“While there is more work to be done, today’s announcement by the CMA cannot be underestimated as it represents an important turning point for small businesses.”