James Moore: Small businesses deserve a better deal from the FCA

Outlook Why did it take government adviser Lawrence Tomlinson stirring up a political storm to prompt the Financial Conduct Authority to investigate the activities of Royal Bank of Scotland's Global Restructuring Group?

Martin Wheatley, the chief executive of the FCA, told MPs that whistleblowers had raised alarm over the unit before Mr Tomlinson accused it of tipping otherwise viable businesses into insolvency. However, it wasn't until Mr Tomlinson blew not just a whistle but a brass band in public that the regulator moved into high gear.

One possible reason is the sheer weight of material the watchdog is having to process right now. In addition to an international inquiry into the foreign exchange markets, Mr Wheatley confirmed investigations into numerous other "benchmark" prices (but wouldn't say which) at yesterday's Treasury Select Committee hearing.

So it may simply be that the GRG, despite the damage it could have inflicted to the UK economy if the allegations are true, hadn't reached the top of the watchdog's bulging in-tray.

But it may also be that the rules as regards small businesses are lax. The FCA, for example, only regulates loans of up to £25,000 in this sector. That is an extremely small figure. A plumber setting up as a sole trader might be able to kit himself out with a decent van, the necessary specialist tools, IT and the rest of it, for that but there wouldn't be a lot left over.

So it may not be inadequate performance on the part of the FCA we are dealing with here so much as inadequate laws.

Given the importance of small businesses to the economy, but also the imbalance in power between them and the big banks, this needs to change whatever the outcomes of the FCA's GRG inquiry.