The FCA has set out a range of new steps to help SMEs access finance more easily.
A recent FCA review concluded that many of the challenges relate to wider market, information and capability challenges, rather than regulation.
The review found that the challenges are often greatest for microbusinesses, which make up 95.5% of all SMEs and are less likely to use external finance.
Limited awareness of finance options, complex application processes, duplicated checks, and difficulties accessing products suited to businesses with limited collateral or largely intangible assets were all highlighted as issues.
The FCA is now focusing its next steps in three areas to help reduce friction:
• Supporting a more proportionate regulatory regime through Consumer Credit Act reform.
• Helping unlock the benefits of open finance, including prioritising SME lending as a key use case.
• Monitoring industry work to explore whether digital verification could reduce duplication in customer checks, while maintaining effective financial crime controls.
The review complements wider government and regulatory work to improve access to finance for smaller businesses.
Graeme Reynolds, director of competition at the FCA, said: "Small businesses need to be able to access the finance they need at the right time to start up, grow and invest. Our regulation is not a major obstacle - that does not mean the system works as well as it could. We're focusing on where we can make a practical difference by reducing unnecessary friction, supporting a more proportionate regulatory framework and helping unlock the benefits of open finance."
