What a "fair banking" Bill could mean for founders

If you've ever applied for finance and hit a dead end, you'll recognise the problem this government Bill is trying to fix.

On 14 January 2026, Gareth Thomas MP, the former Minister for Services, Small Businesses and Exports at the Department for Business and Trade, introduced a Ten Minute Rule Private Member's Bill called the Banks (Financial Exclusion and Access to Finance) Bill.

The Bill's next milestone is Second Reading on Friday 27 February 2026.

Private Members' Bills often struggle to get time. So, this is unlikely to be a quick "new law, problem solved" moment.

But it still matters. It's an attempt to raise the political cost of inaction and to push government, regulators and banks towards clearer accountability on access to finance.

What the Bill would do

The Bill's own wording is unusually direct. It would require banks to:

• measure and disclose how well they:

  • reduce financial exclusion, including exclusion from affordable credit

  • improve access to finance for small and medium-sized businesses

  • be assessed through a rating system based on that performance

• co-operate with credit unions and Community Development Finance Institutions (CDFIs) to tackle exclusion and improve access to finance for SMEs

In other words, this is a "sunlight and pressure" model:

• Make outcomes visible

• Rate performance

• Create incentives to improve

• Work with community finance providers that often serve people and firms that do not fit standard bank models

What others are saying

Support is coming from financial inclusion and community finance voices, and from parts of the small business ecosystem.

The Guardian has reported the Bill as being inspired by the logic of the US Community Reinvestment Act, and notes the argument from supporters that the UK still lacks strong, enforceable levers on mainstream lenders when it comes to affordable credit and small business access to finance.

The same reporting sets out the most likely objection: a Treasury source warning the Bill could duplicate existing regulation, including responsibilities that already sit with the Financial Conduct Authority and the Consumer Duty framework.

That duplication point isn't a detail. If this becomes another layer of reporting that doesn't change outcomes, founders won't feel any benefit.

Enterprise Nation's position

We represent more than 150,000 microbusinesses and sole traders. Our test is simple: does this make it easier to get affordable finance, faster, with fewer dead ends? We support the direction of travel.

There's a real gap between the language used about "supporting SMEs" and what many microbusinesses experience when they apply for finance.

A requirement to measure and publish outcomes could move this from good intentions to visible performance.

We also support a stronger role for credit unions and CDFIs. Many founders who don't fit standard bank models need better routes to community finance, and clearer signposting when mainstream lending doesn't work.

It's positive that the Bill explicitly puts bank co-operation with those providers on the record.

But we aren't backing this on trust. The design will decide whether it helps micro firms or adds bureaucracy.

What concerns us

Microbusinesses can disappear inside the definition of "SME".

Unless reporting is broken down clearly by size of firm, lending can improve on paper while microbusinesses and sole traders see no change. The Bill needs to look hard at these businesses rather than apply a generic SME label.

A ratings scheme can drive gaming. If the metrics are crude, banks will optimise for the score rather than founder outcomes. The methodology has to be robust, transparent and resistant to manipulation.

Compliance costs are real and they tend to land on customers. If this duplicates existing FCA expectations, banks may respond by tightening criteria, slowing processes or raising prices. That usually hits the smallest firms first.

What we'd push for

If this proposal moves forward, these are the practical changes we would want baked in:

1. Explicit reporting for microbusinesses and sole traders, not buried in aggregated figures for SMEs.

2. A proper definition of "access", covering what founders actually experience, not just headline lending totals. That should include drop-off points, time to decision, affordability and what happens after a decline.

3. A real referral route, so where a bank can't lend, a founder is signposted, with consent, to an appropriate credit union or CDFI rather than being left at a dead end.

4. A proportionate framework, so this doesn't become a compliance exercise that crowds out the very lending it's meant to encourage.

5. An independent review after a set period, to prove whether outcomes improved for underserved founders, then adjust if not.

What happens next

The Bill's Second Reading is scheduled for 27 February 2026.

Whether or not the Bill progresses, the question is how we make access to finance work for the smallest firms, not just those who already fit the mould.

If you've applied for finance recently, especially as a sole trader or early-stage founder, tell us what happened. Where did you get stuck, what were you asked for, how long did it take and were you pointed to any alternatives?

See our latest media and policy impact

We give small businesses a voice – in the media and in Westminster. See our latest press releases, policy insights and how we're championing small firms. Visit the media and policy centre