SME Lending Back On Track According To Report 
According to the first annual report on the banking appeals process by Professor Russel Griggs, there has been a “seismic shift” in lending to SMEs since 2008 and goes on to say that the UK has “returned to what many would see as a ‘normal’ state of lending.”

Professor Griggs was appointed as an independent reviewer to oversee the appeals process, which was launched by the Business Finance Taskforce in April 2011. Under the scheme, businesses with a group turnover of up to £25m can appeal to their bank if an application for any form of lending has been refused.

During the year, the participating banks received 827,000 eligible applications for all credit products, ranging from loans and overdrafts to credit cards and asset-based finance. Around 14 per cent of them were turned down and of those, only 2 per cent – or 0.3 per cent of the total – went to appeal.

Griggs said that the banks needed to ensure that all customers knew about the appeal process. “There is a possibility that, if more knew they could appeal, more might apply for credit in the first place”, he added.

Business groups such as the Forum of Private Business (FPB) are now calling for increased awareness amongst SMEs of the appeal's process, with the FPB's senior policy adviser, Alex Jackman, saying:

"The fact that almost 40 per cent of lending appeals have been completely overturned says very clearly that banks are simply not gauging some small business lending risks accurately in the first place, and that has to change.”

"The report is right in identifying an over-centralised banking system that relies far too heavily on automated risk criteria and on data from credit rating companies, many of which appear to use wildly different factors to assess a firm's creditworthiness."

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UK Likely To Resist Elements of Banking Union 
The European Commission unveiled proposals yesterday to create a new “banking union” across all 27 EU member-countries, which could see banks’ shareholders and creditors bearing losses on banks requiring bail-outs before taxpayers have to get involved.

On balance, the UK government would support this idea but is less than enthusiastic about some of the other banking union proposals on the table and Chancellor George Osborne has today spoken out against power being removed from the City of London. He stressed that safeguards would have to be in place to protect the UK’s financial sector if such moves towards a banking union were implemented.

One proposal could see Brussels being able to parachute n a “special manager” to run an ailing bank; another is the idea of "intra-group support agreements", under which banks with operations in several countries across the eurozone would be allowed to transfer resources from one part of the group to another in times of crisis.

Speaking this morning on Radio 4’s Today programme, Mr Osborne said: "There is no way that Britain is going to be part of any eurozone banking union. I think Britain will require certain safeguards if there is a full blown banking union."

He also urged the eurozone to use its bailout fund to recapitalise Spain's banks but said that he did not know how swiftly eurozone leaders would reach an agreement on the issue, as he was "not directly party to these discussions".

However, he said: "I am optimistic they are working hard on solution and I think a solution is coming.”

The Chancellor also stressed the UK government's commitment to a referendum on Europe in the event of a "significant transfer of power and sovereignty" to the EU but said he did not believe that would necessarily happen as a result of the current negotiations.

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Economists Divided Over Quantitative Easing Prediction 
Economists are divided over whether or not the Bank of England’s Monetary Policy Committee (MCP) will maintain or increase its quantitative easing (QE) programme at the monthly policy meeting to be held over the next two days.

The consensus is that interest rates will be held at 0.5 per cent, where they have been since March 2009, but while some economists think that the QE programme will remain at £325bn, others predict that a further £50bn will be released in response to the worsening economic outlook highlighted by poor PMI figures on Friday.

Last month’s minutes from the MPC meeting revealed that several members were close to voting for more QE. An extract from the minutes said that the decision not to expand the QE at this meeting was “finely balanced” for several members and that “there was a case for injecting further monetary stimulus”.

Howard Archer, Chief UK & European Economist at IHS Global said: “On balance, we lean towards the view that the Bank of England will hold fire on more Quantitative Easing at its June meeting, but we certainly would not rule it out.

“Much could depend on the May purchasing managers’ survey for the dominant services sector. And even if the Bank of England does hold off from more QE next Thursday, it is looking ever more likely that it will go back down that road before long,” he added.

And Michael Saunders of Citi commented: “We continue to expect that worsening economic prospects will prompt the MPC to expand QE markedly further – to a total of about £500bn – and that the next instalment will occur soon. On balance, we forecast the MPC will expand QE by another £50bn at the June meeting."

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BCC Cut Growth Forecast 
The British Chambers of Commerce (BCC) has slashed its forecast for economic growth for 2012.

The BCC have said that as a result of the 0.3 percent fall in GDP during the first quarter of 2012 coupled with continued troubles in the Eurozone will keep GDP growth in the UK at minimal levels for the remainder of this year.

As a result, during the latest Quarterly Economic Forecast report from the BCC, which follows official figures published earlier this year that revealed the UK has fallen back into recession, the group – who represent over 100,000 businesses – have cut their forecast from 0.6 percent to 0.1 percent.

However, they have increased their economic forecast for the following year from 1.8 percent to 1.9 percent; showing a glimmer of hope for the economy.

Following the release of the latest data, the BCC director-general, John Longworth, called for more “enterprise friendly” action from the government, as well as the creation of a business bank to provide capital for small businesses.

Mr Longworth has also warned that without action the economy will “bumpy along the bottom” for longer than expected, adding: “We need growth and we need it now.

“If the government works together with the private sector to create the right environment over the long term, we'll be able to prove once and for all that bold businesses can propel us forward out of stagnation and firmly on the road to recovery.”

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HMRC’s Adviser-Charging Stance Shifts 
HMRC have shifted their stance in regard to RDR adviser-charging rules, meaning implementation costs will no longer incur an unauthorised payment charge; although concerns still remain about the impact that providing “wider pensions advice” will have on a member’s tax free cash.

Earlier this month it was widely anticipated that HMRC would rewrite their adviser-charging guidelines following concerns raised by insurers that including implementation costs could result in a fifty-five percent unauthorised payment charge.

Now, the rewritten guidelines states that implementation fees can be included in the overall cost of advice and so will not incur an unauthorised payment charge, under adviser-charging; although uncertainty still remains over how consultancy-charging, which is not specifically mentioned in the guidelines, will be applied for group schemes.

Along with shifting their stance, HMRC’s rewrite of the guidelines has also created a distinction between an adviser charge relating to lifetime annuity advice and a charge relating to “wider pensions advice”, such as drawdown.

As part of the new proposed rules, a quarter of the costs relating to wider pensions advice would be taken from the client’s tax-free cash while any costs for advice on the lifetime annuity would only be taken from the member’s remaining fund.

Following the rewrite of the guidelines, a HMRC spokesman said: “The draft guidance was sent to the ABI for review and we are currently considering its comments.

“We are expecting to make some changes to the draft guidance as a result of the helpful feedback we have received.

“HMRC will consider as a separate matter whether guidance is needed about commercial payments for consultancy- charging by a non-occupational scheme not normally being regarded as unauthorised payments made to or in respect of the member.”

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