Banks will be forced to release the names of small businesses that have taken out UK government-backed pandemic emergency loans if anti-corruption campaigners persuade a judge next week that disclosure is in the public interest.
Spotlight on Corruption will ask a court on Monday to order the British Business Bank to comply with a freedom of information request it filed two years ago to publish the names of all companies that accessed to the Bounce Back Loan Program (BBLS).
During the pandemic, small businesses borrowed £47bn from banks under the scheme, which was 100% guaranteed by the state. Official estimates suggest the UK taxpayer faces losses of almost £5billion from fraudsters who exploited minimal controls around the scheme.
Spotlight filed a FoI application in 2020 with the British Business Bank, which oversees the scheme, to name all of the businesses that have received BBLS loans. But the request was rejected by the bank, citing a personal data protection exemption, a decision which was upheld by the Information Commissioner’s Office, the regulator.
This week, the British Business Bank warned lenders involved in the scheme that it could be forced to publish the names of borrowers. In an email seen by the Financial Times, he said that if Spotlight won the appeal, it would be “ordered to release details of any or all borrowers who have been granted a facility under . . . BBLS”.
George Havenhand, senior legal researcher at Spotlight on Corruption, said: “Next week’s hearing will highlight government decision-making that will cost taxpayers billions of pounds and has been a boon to fraudsters.
“Transparency about who receives taxpayer-backed loans is key to preventing fraud – if those names had been published in 2020. . . these huge losses could have been avoided.
The British Business Bank is already publishing the names of businesses that have borrowed from other Covid-19 schemes, such as coronavirus-related business interruption loans. But some bankers fear that in the event of BBLS, individuals could be exposed, as many of the companies using them were sole traders with accounts in their name.
A banker said: “It’s a clear conflict between freedom of information and banking confidentiality rules.”
Another said: “The key issue is that this is personal data. Many rebound loans are independent traders, and they have not signed prior agreements that their data may be released.
The British Business Bank said the information included “a substantial amount of personal data” where “businesses trade on behalf of their owners”.
He added: “The free publication of a database of almost 1.7 million loans and full details of the companies that have received them risks presenting an opportunity to fraudsters, who can use the information to their advantage, for example to commit identity theft or perform various social engineering frauds.
The appeal hearing is expected to last three days.