Starling Bank rocked by MP attack on loan-for-money fraud

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Starling Bank is reeling from accusations by former Tory minister Lord Agnew that the bank used the government’s Covid loan scheme as a ‘God-given opportunity’ to swell its balance sheets without carrying out adequate checks on capacity loans to repay the debt.

Introduced to cover the devastating effects of the pandemic on small businesses, the rebound loan scheme has relied on UK banks to distribute £47billion of taxpayers’ money to struggling businesses, backed by a government guarantee at 100% it would cover losses if borrowers failed to repay.

Agnew, who quit his post as fraud minister in January over the government’s ‘dismal’ efforts to tackle fraud, named Starling Bank as one of the worst offenders when it came to validate company turnover or submit suspicious activity reports.

“With a minimum of data, I cannot analyze the full extent of the crimes, but I would like to challenge one of these banks which, in my opinion, acted against the interests of the government and the taxpayers: it is the Starling Bank,” he said.

Agnew pointed out that before the pandemic, Starling had only loaned out £23m. By June 2021, according to a business update from the firm, it had dispensed £1.6bn in bounce-back loans.

The bank disbursed a further £640m under the largest coronavirus business interruption loan scheme, which offered up to £5m per borrower.

“It seems to me that they took this as a divine opportunity to inflate their balance sheet by a factor of 50 in just under a year, with no risk to themselves and 100% to the taxpayer,” Agnew said. , billing the bank’s actions as a “gratuitous marketing exercise to build their loan portfolio and thus their business valuation”.

Starling’s Anne Boden expressed shock at the attack on her business and called on Agnew to retract his remarks.

“The comments raised by Lord Agnew about not verifying companies’ turnover or submitting suspicious activity reports are absolutely and utterly untrue and I must ask him to retract the statement,” she said, pointing out that the bank had introduced additional checks and excluded all non-active companies from accessing the scheme.

“I agree with Lord Agnew that we need to protect taxpayers’ money,” says Boden. But “directing its anger at Starling is simply wrong – we were the bank that was criticized by Treasury officials, ministers and MPs, for rejecting so many would-be fraudsters”.

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