Our take on the Q4 2015 Funding for Lending Scheme figures

There are many positives in the Bank of England 2015 Q4 usage and lending data.  Growth in net lending to SME’s is the fundamental objective of the FLS Extension and the data indicates that the scheme is succeeding.  We also see growth in the participation of non-traditional lenders as encouraging because more competition will benefit SME’s.

With only two years to run on the FLS, attention turns to how the Bank of England winds down the scheme.  Falling wholesale funding costs are helpful albeit a trend that has recently reversed.  Our view is that the Bank of England needs to support a diverse lending environment that is fair to non-traditional lenders – like P2P lenders and specialist lenders – who are seeking to expand their participation in SME lending.

Not doing so could risk entrenching the high market share of established players at the expense of new outfits, who bring added innovation in what I hope historians see as a transformational time for the market.