UK's FCA Launches Investigation into Personal Guarantees for Small Business Loans

The probe, initiated by a 'super complaint' from the Federation of Small Businesses, aims to address the growing concerns over barriers to growth for small enterprises.

• The Financial Conduct Authority (FCA) is set to investigate the use of personal guarantees by lenders for small business loans, following a 'super complaint' by the Federation of Small Businesses.
• The investigation will focus on the prevalence and impact of personal guarantees, aiming to collect data on sole traders and small partnerships borrowing amounts below £25,000.
• The FCA's inquiry comes amid reports of over 140,000 business accounts being closed by major banks in the last year, raising concerns about small businesses' access to financing.
• The FCA has also issued a warning to firms to improve their anti-money laundering controls within six months, indicating a broader regulatory crackdown on financial practices.
• Critics, including the FSB, argue that the FCA's current scope of investigation, excluding lending to limited companies, is insufficient and urge for a more comprehensive review.

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