The UK government has removed guarantees on nearly £1 billion of bank loans given to businesses during the Covid-19 pandemic, and lenders are expected to bear some of the losses, according to a Reuters report.
The move follows criticism from regulators and watchdogs who said the loan schemes were too lax and exposed taxpayers to unnecessary risks.
The biggest and most controversial scheme, the Bounce Back Loan initiative, issued £47 billion to small companies with minimal credit checks.
The government took on 100% of the credit risk but some lenders have found they cannot claim under the guarantee due to errors or rule breaches.
Those loan guarantees have been removed by the British Business Bank, which administers the loan schemes, after discussions with lenders.
The bank has the power to offset future claims in the instance of repeat infringements but has not yet done so, according to the report.