Dame Clara Furse Highlights Importance Of Diverse Market-Based Financing

The Financial Policy Committee (FPC) will continue to work with banks to ensure the UK's market-based finance sector is as diverse as possible.

This is according to Dame Clara Furse, the former chief executive of the London Stock Exchange Group who joined the FPC in April 2013, who said the group has thus far focused on improving the resilience of the nation's banks.

She insisted this was a necessary measure in light of the financial crisis, but the FPC must now look at how businesses, particularly small and medium enterprises (SMEs), can gain access to non-bank and market-based finance.

Although startups have found it easier to secure investment in the past 12 months, there are still plenty of entrepreneurs who are unable to take their company to the next level, which ultimately restricts wider economic growth.

"This targeted approach to market-based finance is timely, sensible, proportionate and constructive," Dame Clara remarked.

"In my view, long-term private sector investment, particularly in infrastructure and SMEs, is fundamental to our economic future; this was also highlighted by the G20 in its February communique."

As part of its work, the FPC will look to promote a better functioning securitisation market in the UK, weigh up the pros and cons of introducing a credit register and reduce risks to the system.

Dame Clara believes "credible long-term equity capital" is vital for burgeoning companies that are looking to turn their innovative ideas into fully marketable products/services. She also stressed the importance of regulation within the market, as this will help to build a "safer" financial system in the future.

Her comments came shortly after the British Business Bank announced plans to set up a new Wholesale Guarantee that offers greater protection to banks that lend money to SMEs. A pilot scheme will run at first and if this proves to be successful, the initiative will be rolled out on a wider scale.

Expert Opinion

This is another story which highlights not only the great importance being placed on SMEs in relation to the future of the economy, but also the basic fact that these companies themselves need support if they are going to thrive as hoped. <br/> <br/>"Small businesses can only take steps forward in growth and expansion if they are able to access the right finance and investment support. There is much appetite at present to ensure this is the case and it has to become a reality. <br/> <br/>"We would also urge any small firms to seek legal advice regarding their future plans, to ensure they are prepared when it comes to expanding the workforce, completing deals and considering exporting or expansion abroad." Steven Beahan - Partner