CML news & views

This week, debate has been raging about whether banks are “lending enough to businesses”. How ironic, then, that under the new responsible lending rules being proposed by the FSA, some businesses – sole traders and partnerships – may well find it more difficult than before to borrow in that tried-and-tested source of finance for small businesses of a loan secured against the business owner’s home.

This is because, under the FSA’s MCOB (mortgage conduct of business) rules, such loans are – rightly, in our view – included. But, designed as they are to introduce more stringent assessment of affordability for those with fluctuating incomes that are more difficult to verify, these are precisely the types of business borrowers who will likely be most disadvantaged by the new conservatism in lending that would be a likely side-effect of the proposed new regulatory regime.