U.K. Banks Face Investigation of Small Business Lending

Britain’s banks are poised to face an inquiry into competition in the industry as regulators step up their scrutiny of small-business lending.

The U.K. Competition and Markets Authority will today publish the findings of an investigation into small-business lending it started in June 2013 as well as another probe begun in April into checking accounts. The CMA may announce the probe at the same time, according to the Federation of Small Businesses, which represents about 200,000 British firms.

Small businesses are “unable to shop around to find the lender best suited to their needs due to limited information,” John Allan, the FSB’s national chairman, said by e-mail. “With more competition comes better choice for customers.”

British lawmakers want to loosen the grip of Britain’s four biggest lenders -- Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc -- which control most of the market for small-business lending and have hit by scandals including the mis-selling of interest-rate swaps to small businesses.

A CMA spokeswoman declined to comment on the FSB statement. The regulator is also scrutinizing the energy market to determine whether the six biggest utilities are unfairly profiting from their market power. The CMA’s report may recommend splitting power generation businesses from units that supply consumers and businesses.

Before it's here, it's on the Bloomberg Terminal.