Banks are accused of misusing the Enterprise Finance Scheme set up to provide government-backed loans to small companies who cannot get access to traditional credit.
The SFO is looking at claims that banks have used the scheme to remove companies' overdrafts and pass risky loans onto the taxpayer instead.
It is also reviewing allegations that banks mis-sold these loans by duping customers into believing that they would only be liable to pay 25pc of the debt if their company failed.
Launched in 2009, the Enterprise Finance Guarantee Scheme is designed as a lifeline for small and medium sized firms who lack the security to get a bank loan.
Under the initiative, the Government guarantees 75pc of this loan – making it less risky for the bank by transferring the risk to the taxpayer.
But companies claim they were persuaded to take out these loans on the basis that the guarantee also covered 75pc of their losses if their business failed. Firms which also had an overdraft and therefore should not have qualified for the scheme say they were persuaded to take out a government-backed loan on this basis – with the catch that their bank overdraft was cut or removed.
Lloyds (up 0.46p to 74.05p) and
Yesterday, shadow business secretary
He said: 'These are very serious allegations indeed and it is welcome that the SFO is looking into them to determine if there has been any criminal wrongdoing.'
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