Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent steps she has taken to assess the unregulated lending market.

The market for lending in the UK is diverse. Consumer credit is highly regulated, while business lending is largely a commercial matter save for regulatory protections that are afforded to the smallest businesses, requiring protections equivalent to those given to consumers. A number of different public bodies routinely make assessments of lending provision in the UK as a whole, its shape and character, including the British Business Bank and Bank of England. The Government takes an interest in this work, and engages with various stakeholders to understand the provision of finance in the UK and matters relating to business lending.

More widely, the Government recognises the importance of understanding private credit provision in the UK, as both banks and private markets play important roles in lending to the real economy, diversifying funding sources and supporting innovation. Globally, private markets have become an increasingly important source of finance for firms, and drove nearly all of the increase in lending to UK businesses between 2008 and 2023. The Government therefore supports the recent efforts of the Bank of England, FPC and domestic and international regulators to deepen their understanding of, and work to mitigate, any emerging risks in private markets, and better understand the connections between private credit and the wider banking system.