Council to delay small business lending until regulatory switch is made

Bournemouth Borough Council has formed and wholly owns Bournemouth Community Finance Company Limited as a vehicle for the initiative.

It said a company board had been established and the necessary consumer credit licence had been granted in November last year.

The company will also offer mortgages under the Housing Act to first-time buyers, with decisions based on affordability.

Bournemouth expects to make an £8m return over a ten-year period.

Cllr John Beesley, the local authority’s Leader, said: “The company will offer loans to small businesses subject to approval and meeting Bournemouth Community Finance Company Limited’s credit and underwriting criteria.

“Consumer credit licence regulation is currently undertaken by the Office of Fair Trading. This duty will pass to the Financial Conduct Authority on 1 April, and requires a different set of compliance regulations, which have yet to be published by Government. Consequently we have decided to wait until the new regulations come into force from 1 April. We shall therefore only need to undertake this work once.”

On the mortgages side, Cllr Beesley said preparations were continuing. “We are ensuring that all the legal frameworks are completed in time,” he added.