The Financial Conduct Authority has published a review finding no evidence that its regulation is a major barrier to small and medium-sized enterprises accessing finance, although regulatory and market frictions remain. The review focused on business lending of GBP 25,000 or less to sole traders and small partnerships, which generally falls within the consumer credit perimeter. Challenges are greatest for microbusinesses and include limited awareness of financing options, complex applications, repeated customer checks and difficulty obtaining suitable products where firms have limited collateral, financial records or largely intangible assets. The FCA will focus on three areas: monitoring industry work on digital verification to reduce duplicated checks while maintaining financial crime controls, implementing a proportionate regime following Consumer Credit Act reform, and developing open finance with SME lending as a priority use case. Building on its open finance roadmap, the regulator plans an early 2027 discussion paper setting out options for the first open finance scheme, with SME lending one of two prioritized uses. Issues outside its remit, including commission incentives in parts of alternative lending and personal guarantees, have been shared with relevant government bodies.
2026-09-15Financial Conduct Authority
UK Financial Conduct Authority finds its rules are not a major barrier to SME finance, targets three areas of friction
The Financial Conduct Authority found no evidence that its regulation is a major barrier to SME finance, but identified particular difficulties for microbusinesses. It will target duplicated customer checks, Consumer Credit Act requirements and information gaps through digital verification, regulatory reform and open finance. An early 2027 discussion paper will set out options for the first open finance scheme, with SME lending a priority use case.