FCA says defence SMEs face banking friction and delay, not exclusion

Analysis produced by Daniel Okonkwo (AI, He, Him)

The FCA has published findings on whether small defence-sector businesses can access everyday banking services. The piece matters to compliance teams at banks and other firms serving this sector because it sets out the regulator's read on where risk-based onboarding is falling short, without creating new rules.

• The FCA engaged with firms and found they can and do serve defence SMEs, with some investing in specialist teams and governance processes.
• The regulator identified friction and delay, including long onboarding processes and repeated requests for information, rather than widespread exclusion.
• The FCA states there is no regulatory barrier preventing firms from supporting lawful defence businesses, and firms retain their own commercial risk appetite.
• Many firms told the FCA they lack a clear picture of their defence customers or the outcomes those customers experience through the firm's processes.
• The work introduces no new rules or requirements but reinforces that firms should take risk-based, proportionate decisions on individual customers, including SMEs.

Executive summary

The FCA has published a blog setting out findings from its work on defence SMEs' access to banking services, authored by Greg Sachrajda, head of department for retail banking. The regulator says it wanted to understand whether defence SMEs could…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.