Purpose of Finance Wales must be defined, says National Assembly Committee
30 May 2014
The purpose of Finance Wales must be made clear says a National Assembly for Wales Committee.
The organisation was set up by the Welsh Government in 2001 to plug a funding gap for small and medium-sized businesses (SMEs) in Wales trying to raise finances. It manages £200 million worth of investments through four different funds.
Finance Wales came under the spotlight after claims it was ‘not fit for purpose’ and was charging businesses more in interest for loans than some high street banks.
But the Committee was told that many businesses valued the support they received from the organisation and that Wales was ‘fortunate to have it’.
The Committee concluded that Finance Wales needed to better market and communicate what it could do for businesses.
On the issue of interest rates for loans the Committee found Finance Wales to be comparable with most banks but there were instances where rates were higher. The Committee accepted that mitigating factors such as the amount of risk attached to a loan played a part but found that a significant proportion, just under a quarter, could be found cheaper in the commercial market.
“Finance Wales has been the subject of a great deal of speculation in the media but the Committee found it to be a well-regarded organisation across the business sector,” said Jocelyn Davies AM, Chair of the Finance Committee.
“Finance Wales’s problems seem to stem from a lack of communication and information over what it is for and how it can help small and medium sized businesses.
“The Committee found that a lot was expected of Finance Wales, including addressing issues which were not part of its remit.
“We believe the Welsh Government should clarify the purpose of Finance Wales and that the organisation itself could benefit greatly from some marketing and communication campaigns to inform Welsh businesses of how it can help them.”
The Committee makes 11 recommendations in its report including:
That Finance Wales undertakes a review of its working practices to ensure that it is delivering for SMEs. We recommend that, to inform this, an independent poll of SMEs is commissioned to establish market awareness of and areas of concern about Finance Wales;
That any changes to Finance Wales build on its existing skills and infrastructure, and do not damage the reputation it has developed; and
That the Welsh Government should clarify the aims and remit of Finance Wales. These should set out the balance between its dual roles of achieving a commercial return and contributing to economic development.
More information about the inquiry into Finance Wales can be found here.