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<p>The Government is committed to competition and diversity in financial services
and would like to see firms with a range of business compete and succeed.</p><p>The
Government has supported both the Peer-to-Peer (P2P) and Crowdfunding sectors, which
provide alternative sources of finance for both businesses and individuals, by introducing
a proportionate regulatory regime as well as other policies, such as the inclusion
of P2P loans in ISAs.</p><p>The Small Business, Enterprise and Employment Act 2015
contained two policies to support Small and Medium-sized Enterprises (SMEs) in accessing
finance. The first requires the major banks share information on their SME customers
with other lenders through designated Credit Reference Agencies. This will improve
the ability of challenger banks and alternative finance providers to conduct accurate
risk assessments and level the playing field between providers. The second requires
major banks to refer SMEs they reject for finance, with the SMEs permission, to ‘finance
platforms’ that can match SMEs with alternative finance providers.</p><p>The Government
has established the British Business Bank to support the development of diverse finance
markets for smaller businesses in the UK. The British Business Bank’s £950m Business
Finance Partnership aims to diversify the sources of finance available to smaller
and mid-sized firms and reduce their dependence on bank finance. £863m has been allocated
to funds supporting mid-sized firms, with £333m already invested alongside private
money, generating over £1bn of lending to businesses.</p><p>The Government has also
continued to support the building societies sector through a number of measures including:
carving out building societies from the Independent Commission on Banking ring-fencing
regulations, extending ISA eligibility to Core Capital Deferred Shares, and applying
a £25m sector-specific allowance to carried-forward losses for Corporation Tax. More
recently, the Government listened to the concerns of smaller organisations, including
building societies, when taking steps to remove the reverse burden of proof from the
senior managers regime.</p><p>The Government has also taken significant steps to support
the credit union sector by investing £38m in the sector through the Department of
Work and Pensions’ (DWP) Credit Union Expansion Project, changing legislation to allow
credit unions to admit corporate members, providing £500,000 to help armed forces
personnel access credit union services and launching a Call for Evidence which allowed
all credit unions, regardless of size or influence, the opportunity to contribute
their vision for the future of the sector to the wider debate.</p>
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