By John Reynolds on Monday 6 June 2022
Lord Agnew claimed Starling did not run thorough checks on borrowers before handing out loans through the £47bn bounce back loan scheme, but Starling has robustly denied the allegation.
The government's former counter-fraud minister has said he will not retract his public attack on Starling Bank, claiming it was “one of the worst” performers in distributing government-backed loans, unless he sees data that proves him wrong.
Lord Agnew claimed Starling did not run thorough checks on borrowers before handing out loans through the £47bn Bounce Back Loan Scheme.
Lord Agnew told The Times: “I have no plans to withdraw my comments until I can see some data that puts my mind to rest.”
He has submitted several questions about the lender’s performance on the scheme.
But the online lender has denied the claims aired by the former Conservative minister, who quit as the anti-fraud minister in January over the government’s “woeful” efforts to control fraud.
The bank has also demanded his claim that from “what little data” he was able to gather that the bank was “one of the worst when it came to validating the turnover of businesses or submitting suspicious activity reports” be withdrawn.
A Starling spokeswoman said: “We are meeting with him imminently to discuss his observations. We hope that once we’ve met with him, he will understand that the comments he made about us are factually incorrect and that he will withdraw his remarks.”
Starling refused to give AltFi details about when the meeting was to take place or who would be attending. But a person close to Starling said Lord Agnew never contacted the lender when he was a minister asking the bank for any data.
Last month, Lord Agnew publicly singled out Starling as one of the worst offenders claiming it had used the Covid loan scheme as a “God-sent opportunity” to swell its balance sheet without carrying out sufficient checks on businesses to pay back the loans.
He pointed to a significant increase in the bank’s lending since the scheme went live.
Before the pandemic, in November 2019, Starling had lent £23m, excluding loans bought from other companies. By June 2021, it had distributed £1.6bn worth of bounce back loans.
Starling also distributed £640m under another government-backed scheme, the coronavirus business interruption loan scheme, which offered up to £5m a borrower.
“It seems to me that they took this as a God-sent opportunity to swell their balance sheet by a factor of 50 times in barely less than a year, with no risk to themselves and 100% risk to the taxpayer,” Lord Agnew said.
But Boden said the bank had introduced extra checks including for sole traders.
High-street banks and online lenders distributed £47bn to small businesses under the Bounce Back Loan Scheme during Covid. The government promised to cover 100 per cent of the losses if the businesses failed to repay.
Critics of the scheme say minimal checks were made to stop fraud and the cost to the taxpayer could be as much as £5bn.