Budget 2013: Osborne and Bank in talks over FLS

Nia Williams

March 20, 2013

Osborne said the government and the Bank of England were “actively considering” whether there are potential extensions to the scheme that will help boost lending further.

Tony Ward, chief executive, said: “I expect the lack of detail is because they haven’t worked it out yet which leaves the industry with many questions.

“Will it be simply extended by another year or so as at present the deadline for drawing funds is January 2014.

“Or will it become more targeted to encourage the big lenders which have shied away from higher risk lending to take on more lending to SMEs and first-time buyers.”

However Ward said that may not be possible because of European state aid rules which could prohibit such targeted measures even if the government wants to go down that route.

The second consideration is the possibility that the funding can be opened up to non-bank lenders.

Ward said: “The non-bank portion of the market is very small. If you went back five and a half years ago there were lots of lenders under this banner but since the debt markets have closed now that is reduced to a handful but I am sure those remaining would jump at the chance to access the same funding as the banks. And there are lots of closed non-bank lenders which have not lent anything for years which may choose to access these funds.”

Peter Williams, chief executive of the Intermediary Mortgage Lender’s Association, said that by opening up the scheme to non-bank lenders you will effectively achieve the goal of targeting higher risk lending without putting any formal conditions on the fund.

He said: “There are rules coming from Europe which will not allow the government to discriminate against individuals therefore targeting certain groups could be classed as such. However non-banks, while there are only a few, could make a real difference with access to this scheme because they target niche lending allowing money to flow through areas previously untouched by users of this scheme.”

Sign up to our daily email