Lending to small businesses and low-income areas must expand, say Labour backbenchers

Labour backbenchers are pushing for legislation requiring UK banks to increase affordable lending to small businesses and low-income areas. Former minister Gareth Thomas introduced a bill modeled after the US Community Reinvestment Act (CRA), which would mandate banks to report on and improve their lending practices in underserved communities. The bill aims to address financial exclusion and support entrepreneurs by establishing reporting requirements and a rating system for banks based on their performance. It also seeks to promote collaboration with credit unions and community development finance institutions (CDFIs). Several prominent Labour figures are co-sponsoring the bill, highlighting concerns that the Treasury's existing financial inclusion strategy lacks specific obligations for the financial sector. The Treasury Select Committee has launched an inquiry into the Treasury's proposals.

Explore how the topics in this article connect to other news stories