Government urged to level the playing field among UK lenders
The government has been urged to level the playing field between banks and non-bank lenders, support poorer consumers during the pandemic, and protect London’s crown as a global fintech hub.
Analysts at brokerage firm Goodbody highlighted the benefits of alternative lenders, not only for providing government funding during the pandemic, but also from a financial inclusion perspective.
“While non-banks perform an important function in the context of granting credit to primary customers, it is also essential to note that the less wealthy customers are highly dependent on them, i.e. the core customer segment. the company most affected by Covid-19, ”Goodbody said in a research note.
Analysts said the government must “ensure that this subset of customers continue to have access to credit rather than falling into the arms of loan sharks.”
“Of course, any arrangement that would allow non-banks to benefit from public financing (regardless of how it is channeled) would be very constructive in the context of mitigating this very real risk – and would mark some effort. to level the playing field for UK lenders, with virtually all of the support extended to the lending sector so far directed to the banks, as far as we can see, ”Goodbody said.
“Indeed, if these actors will continue to be disadvantaged in terms of financial aid, the serious question arises as to whether the space should have been regulated from the start (to avoid the explosion that we will see if they remain unsupported).
The research also noted that the UK is “way behind the curve in supporting alternative lenders” compared to other countries such as Australia and the US.
“If the non-bank segment is not taken care of, there will be casualties in the form of failed businesses as well as serious questions regarding London’s position as a fintech capital in my opinion,” the research adds.
Goodbody’s comments follow the launch of Peer2Peer Financial News ” “Turn over our industry” campaign, which calls on the government to use peer-to-peer lending platforms to deploy emergency funds to small businesses and home builders.