The Treasury is quick to stress that businesses will have to have claims referred to the credit adjudicator service by their regional business body. But this quango, which will cost five million pounds a year to run, strikes me as a quite absurd attempt to second guess commercial lending decisions. It is also unaccountable. For instance, who carries the can if the credit adjudicator orders a bank to grant a loan that then turns out to be bad? Will the bank be able to reclaim the money from the credit adjudicator service or will it have to just absorb the loss?
Many banks have behaved exceptionally badly over the past few years. There’s also no doubt that they should pay an insurance premium for the implicit guarantee that the state offers them against failure. But when a state funded body can start interfering in individual lending decisions we are heading in a very worrying direction.