Fiftieth Report - Bounce Back Loans Scheme: Follow-up

The government's response discusses Électricité de France’s (EDF) strategies, plans and the estimated costs, which are scrutinised, challenged, and approved by the Non-NDA liabilities assurance team (NLA) under the terms of the revised funding agreement. It does not address the committee's recommendation to develop a strategy setting out the increase needed in Scheme counter-fraud resources, or explain how to improve the accuracy and timeliness of data.

The government agrees and states that in the event of another crisis similar in scale to the COVID-19 pandemic, the government would again need to consider the trade-offs between the generosity and speed of a loan guarantee scheme, and the consequent risks for value for money. There is now increased Fraud and Financial Crime resource in the Bank and the launch of the Public Sector Fraud Authority will further strengthen the ability of the government to manage and mitigate fraud risks.

The government agrees and says that the Bank assesses lenders’ compliance through its audit programme and can take remedial action and issue financial penalties to encourage lenders to identify and recover fraudulent loans. The FCA is working collaboratively with the Bank, the department and HM Treasury to find areas where regulatory powers and tools can add value.

The government agrees with the recommendation to set out its strategy for collecting overdue payments after the lenders have completed their 12-month requirements and aims to implement it by Winter 2022. The long term BBLS counter fraud strategy will address the department’s strategy for enforcement and recoveries in cases of suspected fraud.

The government agrees with the Committee’s recommendation for the Bank to develop a strategy to mitigate the negative impact of the Scheme on the SME lending market and publish its findings in its next Small Business Finance Market report. The next iteration of the Small Business Finance Market report, expected in Q1 2023, will continue to report on the evolution of the small and medium-sized enterprises (SME) lending market. The Bank’s existing programmes continue to help challenger and specialist banks to make the SME banking market more diverse.

The government's response discusses the Programme's uncertainty and states the CEO of the Delivery Authority will remain accountable for the skills and expertise to deliver the Programme, and their independence remains unchanged. An interim CEO was announced to assess capability and capacity gaps within the sponsor function to ensure it has the necessary skills and expertise. It does not address the committee's recommendation for the Department and the Bank to establish a strategy on how it intends to share lessons from the scheme within a month of the publication of their first evaluation report, or the Bank to develop a business case for an emergency loan scheme for future crisis within 6 months of publication of this report.

The government agrees with the committee’s recommendation to improve lenders’ performance in managing loans and risks to the taxpayer by legal, regulatory and contractual incentives and states that ongoing management of the BBLS and associated financial risks remains one of the highest priorities for the department and the Bank. The Bank assesses lenders’ compliance through its ongoing lender audit and assurance programme and can take remedial action, ranging from creating an action plan with the lender’s management team through to cancellation of a guarantee.

The government agrees with the Committee’s recommendation that next time the Department launches an emergency business support scheme, it should be explicit on the trade-offs and level of fraud it is prepared to tolerate from the outset. It mentions the COVID-19 pandemic required an extraordinary response from government and the scheme's design would create a heightened vulnerability to fraud and there would be a significant risk of credit losses. There is now increased Fraud and Financial Crime resource in the Bank. Additionally, the launch of the Public Sector Fraud Authority this year will further strengthen the ability of the government to manage and mitigate fraud risks, deal with vulnerabilities, and overall increase its counter fraud capacity and capability.

The government agrees with the recommendation to be explicit on the trade-offs and level of fraud it is prepared to tolerate from the outset next time the Department launches an emergency business support scheme. The BBLS was implemented under Ministerial Direction, and the exchange of letters that were published in June 2020 shows that these risks were acknowledged at the outset.

The government agrees with the recommendation to put in place a clear strategy to manage the long-term legacy of the Scheme and aims to implement it by Autumn 2022. They are formalizing a long-term strategy to counter fraud in the BBLS, building on work to date.

The government agrees and will put in place a clear strategy to manage the long-term legacy of the Scheme within a month of the publication of its evaluation report, expected in Autumn 2022, including formalizing a strategy that will set out its long-term approach to counter fraud in the BBLS.

The government agrees with the recommendation to put in place a clear strategy to manage the long-term legacy of the Scheme and aims to implement it by Autumn 2022. They are formalizing a long-term strategy to counter fraud in the BBLS, building on work to date.

The government agrees with the recommendation for the Bank to develop a strategy to mitigate the negative impact of the Scheme on the SME lending market and publish its findings in its next Small Business Finance Market report, with a target implementation date of Spring 2023.

The government agrees and will have the Bank develop a strategy to mitigate the negative impact of the Scheme on the SME lending market and publish its findings in its next Small Business Finance Market report, expected in Q1 2023. The Bank's existing programmes continue to help challenger and specialist banks to make the SME banking market more diverse.

The government agrees with the recommendation to establish a strategy on how it intends to share lessons from the scheme and aims to implement it by Summer 2022. The department agreed to work in conjunction with HM Treasury and the Bank to produce a report covering lessons learned across the COVID-19 loan guarantee schemes.

The government agrees with the recommendation to establish a strategy on how it intends to share lessons from the scheme and aims to implement it by Summer 2022. The department agreed to work in conjunction with HM Treasury and the Bank to produce a report covering lessons learned across the COVID-19 loan guarantee schemes.

The government agrees with the recommendation to establish a strategy on how it intends to share lessons from the scheme and aims to implement it by Summer 2022. The department agreed to work in conjunction with HM Treasury and the Bank to produce a report covering lessons learned across the COVID-19 loan guarantee schemes.