Starling Accused Over COVID Loans

Starling Bank has been accused of failing to run adequate checks on people who borrowed a COVID-19

May 31, 2022
Starling Accused Over COVID Loans
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Starling Bank has been accused of failing to run adequate checks on people who borrowed a COVID-19 loan by former Tory minister Lord Theodore Agnew.

Speaking at an anti-fraud event held in Westminster, he made claims that many banks could have benefited from the Bounce Back Loan scheme by failing to carry out sufficient checks into applicants and then relying on a government bailout but singled out Starling Bank in particular as one that he believed had acted in its own interests only.

With minimal data, I cannot analyse the full extent of the misdemeanours, but I’d like to call out one of these banks that I believe has acted against the government’s and taxpayer’s interests: this is Starling Bank.

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Lord Agnew

Suspicious Lending Activity?

Agnew backed up his claims by comparing the bank's lending patterns before and after the Bounce Back Loan scheme was introduced. Prior to November 2019, Starling had lent £23 million pounds to customers, not including loans that they had acquired from other companies. In June 2021, that lending figure had grown massively to £1.6 billion in bounce-back loans.

The company had also loaned another £640 million as part of the Coronavirus Business Interruption Scheme. Bounce Back Loans were designed for small businesses and offered a maximum of £50,000, which means Starling handed out at least 32,000 loans. The Business Interruption Scheme had a larger cap of £5 million per borrower.

It seems to me that they took this as a God-sent opportunity to swell their balance sheet by a factor of 50 times in barely less than a year, with no risk to themselves and 100% risk to the taxpayer.

Lord Agnew

Agnew also claimed that it was a “cost-free” marketing exercise as a way to build up their book of loan clients, and at the same time boost the company’s valuation. He claims that Starling was “one of the worst” banks in trying to validate whether businesses should be allowed to take part in the scheme, failing to validate turnover or submit reports of suspicious activity.

Starling’s Response

On hearing the comments, Starling Bank’s CEO Anne Boden said she was “shocked”. She claimed that Starling has been one of the more active banks in trying to prevent fraud and that they had been open and honest about their approach to the scheme.

The comments raised by Lord Agnew about not checking the turnover of businesses or submitting suspicious activity reports are absolutely and utterly wrong and I must ask him to withdraw the statement.

Anne Boden, Starling Bank CEO

Boden has given a strong response, claiming that Starling was the bank that was singled out for criticism for rejecting too many people on the basis of potential fraud, in contrast to Lord Agnew’s claims.

Alongside his comments directed at Starling Bank, Lord Agnew also stated that, of the bounce back loans fraudulently taken out by companies that were already dissolved, 87% came from just three lenders, while two banks were responsible for 81% of loans given to companies that were set up after the pandemic began. Lord Agnew has not yet named the banks in question.

Ian Lewis
Ian Lewis
Ian is an experienced writer with 15 years’ experience working in journalism and marketing. He’s worked in-house in financial institutions as well as writing freelance pieces for a variety of banking and financial trading websites.

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