In the latest Public Accounts Committee (PAC) report, MPs stated that BEIS was ‘placing too much reliance on lenders to minimise taxpayer losses’ but found the scheme’s design does not ‘incentivise banks to do this’.

The report once again criticised the department for being ‘complacent in preventing fraud’ on the  bounce back loan scheme (BBLS) and that if BEIS is going to put their reliance on the lenders, then it needs to set out ‘how it will use legal, regulatory, and contractual incentives to improve the lenders’ performance in managing the loans and the risks to the taxpayer’.

The committee stated that the department has put their reliance on the banks as they believe that commercial lenders are the experts in this field with their experience of standard commercial loans, however, MPs highlighted that ‘evidence on the effectiveness of the lenders’ operations is slim’, which is a ‘worrying indicator’.

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