UK Financial Conduct Authority reiterates need to address banking delays for defence SMEs

In a new blog post, the Financial Conduct Authority (FCA) revisits its recent findings that small and medium enterprises (SMEs) in the defence sector face banking friction and delays rather than widespread exclusion. Greg Sachrajda, head of department, retail banking, highlights lengthy onboarding, repeated information requests and slow decisions despite firms’ willingness to serve these businesses. The central issue is whether banking processes are proportionate to the risks individual customers present. There is no regulatory barrier to serving lawful defence businesses, although financial services firms retain discretion over commercial decisions and risk appetite. Firms should distinguish between defence businesses’ different activities and risk profiles while maintaining robust due diligence against financial crime and other risks. Many firms also lack a clear picture of their defence customers and the outcomes they experience. Better management information would help identify excessive application times, inconsistent decisions and governance processes that do not reflect actual risks.