Overview

• The Public Accounts Committee criticised the government’s “dangerously flat-footed” approach to reclaiming about £1.9 billion lost to fraud under the Covid bounce back loan scheme.
• The Department for Business and Trade estimates that at least £1.9 billion in bounce back loans were lost to fraud, with approximately £130 million recovered to date.
• The government withdrew guarantees on £367 million of loans where lenders were deemed to have failed in due diligence, shifting those potential losses onto banks.
• The Insolvency Service has assumed responsibility for viable recovery cases after the PAC highlighted banks’ lack of incentive under the state guarantee.
• Starling Bank removed the government guarantee from a group of high-risk loans and provisioned £28 million to cover potential losses.