Jacob Rees-Mogg Asks Starling Bank About Rebounding Loan Recovery


Britain’s Brexit Opportunities Minister Jacob Rees-Mogg has written to Starling Bank asking how it plans to recover loans that may have been fraudulently claimed by businesses under the government’s bounce-back loan scheme.

Banks issued these loans, which are 100% taxpayer guaranteed, with minimal customer checks to provide emergency support to struggling businesses during the Covid-19 shutdowns.

The government has estimated that of the £47billion lent by all banks under the scheme, up to £5billion could be lost to fraud.

Starling, which launched in 2014 as a branchless, app-based bank, has grown rapidly over the past two years, largely due to rebound loans.

£5 billion

Sum possibly lost due to fraud on the £47billion lent by all banks under the scheme

In a letter to Starling chief executive Anne Boden, seen by the Financial Times, Rees-Mogg said Starling was the most exposed of the top 10 business bounce-back program lenders that took out loans before being quickly dissolved, a sign of potential fraud.

He added: “I would welcome an explanation of how you manage this risk and what your specific handling strategies are for debt collection in this population, particularly in relation to cases of suspected fraud.” .

The letter also said Starling had “duplicate loans,” although program rules allowed one loan per company. He added that other banks had “taken proactive steps to remove duplicates” but “Starling has not.”

Starling said he had “fully met the requirements of the [taxpayer] Guarantee and we continue to support the Cabinet Office, BEIS and the Treasury ensuring that taxpayers’ money is protected.

“We look forward to the publication. . . a detailed BBLS dashboard that will provide additional context.

The government is preparing to unveil this rebounding lending scorecard, with data including the likely extent of each bank’s losses, starting this week.

The dashboard should detail the expected percentage of losses at each bank that issued bounced loans and an estimate of the amount lost to fraud. It will also indicate the total amount paid to each bank to cover losses under the state guarantee.

Rees-Mogg’s letter to Starling follows a series of meetings with UK banks. He also launched a new Public Sector Fraud Authority last month, which will work with banks to identify bounce loan fraud and recover funds.

Starling announced its first annual earnings this summer.

According to Lord Agnew, the government’s former anti-fraud minister, he loaned out £23m in November 2019, but by June 2021 he had handed out £1.6bn in rebound loans.


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