The new Small and Medium Sized Business (Credit Information) Regulations 2015 came into force on 1 April. The rules mean that nine major banks, including RBS, Lloyds, Barclay’s and Santander, will, with permission, share the credit information they hold on SMEs with three designated credit reference agencies (CRAs).
These CRAs – Experian, Equifax and Creditsafe – will be required to share the data equally with all finance providers.
The move is aimed at levelling the playing fields in the SME lending market, and consequently, enable more small businesses to secure funding.
Harriett Baldwin, economic secretary to the Treasury, said: “Small businesses are the backbone of Britain’s economy and it is right we make every possible source of finance available to them.
“The best way to deliver this is to increase competition in the banking sector and remove the barriers to new sources of finance for SMEs. Requiring banks to share data is a major structural reform that will level the playing field between banks and alternative finance providers.”
Sharing of the information will begin after tests between the banks and CRAs have confirmed that data can be shared securely and accurately. This is expected to be later this year.