"Challenger" banks frustrated by Government support of P2P lenders
The British Business Bank, which is backed by the British Government, has been focussing too much on helping unregulated peer-to-peer lenders, at the expense of other “challenger” banks, according to Mark Sismey-Durrant, CEO of challenger, the Hampshire Trust Bank. Mr. Sismey-Durrant is frustrated by the Government support of unregulated P2P lenders, when banks like his are actually regulated, and, according to him, receiving much less support. Sismey-Durrant stated: ‘The BBB was originally set up to help challenger banks, but I think it has found it easier to support unregulated businesses than banks.’

The Government-sponsored British Business Bank has boosted the bottom end of the economy and given most of its help to unregulated lenders, according to the boss of one of Britain’s challenger banks.

Mark Sismey-Durrant, the chief executive of Hampshire Trust Bank, said he was frustrated by Government support for unregulated peer-to-peer lenders, which disadvantaged challenger banks, which are regulated.

He complained that the BBB, initially spearheaded by former Business Secretary Vince Cable, lacked focus and said: ‘Quite what the bank’s mandate is post-Election remains to be seen.

Finance providers: Mark Sismey-Durrant, the chief executive of Hampshire Trust Bank, said he was frustrated by Government support for unregulated peer-to-peer lenders

‘It is a very willing co-funder for peer-to-peer lenders and alternative finance providers, which is a little bit frustrating.

‘We’ve got all this regulation that we’re dealing with, but actually if you’re a peer-to-peer lender and you can establish a relationship with the BBB then you get an element of help in a market where we’re trying to lend as well. I think the reason it has settled on unregulated lenders is it is just trying to fuel the bottom end of the economy. There are some really tiny businesses.’

There is no Financial Services Compensation Scheme protection for peer-to-peer investors if money is lost in the event of a default, and the Financial Conduct Authority stated in a review in March that crowdfunding websites were misleading consumers.

Last week, investors who use peer-to-peer website TrustBuddy had their accounts frozen after a £3.5million accounts discrepancy was found. The Swedish website opened to UK investors two years ago and offered returns of up to 12 per cent. It is now being investigated by Swedish authorities.

Sismey-Durrant added: ‘The BBB was originally set up to help challenger banks, but I think it has found it easier to support unregulated businesses than banks.’

Hampshire, which relaunched last year as a specialist bank focusing on the needs of small business customers after being bought by Alchemy Partners in May 2014, was formed in 1977. Sismey-Durrant was appointed chief executive in 2012, having previously run Sun Bank and Heritable Bank.

BBB chief executive Keith Morgan said in the bank’s September performance update that ‘work to support smaller businesses at all stages of growth continues apace’.

The BBB opened its Enable Guarantee programme in March to banks that lend to smaller UK businesses. It encourages participating banks to lend more to smaller firms by reducing the capital they need to hold to back such lending.

The first transaction, with Clydesdale and Yorkshire Banks, will support £125million of new lending to smaller businesses, ‘of which at least £50million will go to products and industry segments the banks have not previously covered’, the BBB said.

Keith Morgan, chief executive of BBB, said: ‘Peer-to-peer, alternative finance and challenger banks are increasingly important areas of the small business finance market and the British Business Bank has programmes open to all types of participants.