Appeals for Banks turning down business loans

K-9

Just getting round to look at the budget now. Just seen this thing about appeals if your bank refuses a loan.

http://www.budget.gov.ie/Budgets/2010/Summary.aspx#IncomeTax

Credit Review System on Business Lending
Small and Medium Enterprises (SMEs), farm enterprises and sole traders are being given a right of appeal where an application for credit is refused by a participating bank, after the bank’s own internal process has been finalised. Where it is recommended that credit should be granted, the participating institution which refused credit must comply or provide a written explanation.

Where a decision on an application is not given by the participating institution within a reasonable period of 15 working days, or where the terms or conditions attached to a credit facility or its price are excessively onerous, this will be regarded as constructive refusal and creates a right to appeal. A fee will be charged for each appeal, which will be refunded by the bank if successful.

Mr John Trethowan has been asked to oversee the establishment of this credit review system with initial administrative support from Enterprise Ireland.

There will be a regular analysis of appeals and their outcomes in respect of each participating institution, which will be published, but commercial confidentiality of customers will be maintained.

In addition to reviewing individual business decisions, the credit review system will also entail review of the credit policies and practices of the banks, in relation to all SME sectors, paying particular attention to sectors, such as the retail sector, including car dealerships, tourism, and agriculture, where particular stresses have been reported. Mr. Trethowan and his team will review the credit policies of the Banks, including the sectoral availability of credit and to report to the Minister for Finance. This will enable him to decide what further action might be necessary in this area.

Wonder will it have any effect. Overall it sounds good but really, should we be forcing more lending to car dealers especially?