BANKS may be stress-testing their own businesses for Brexit, but they have not revealed how they will handle existing small to medium-sized enterprise (SME) clients should it result in economic turbulence, according to a new report.

Brexit and Scottish Business, from former MPs Michelle Thomson and Roger Mullin of consultancy firm Momentous Change, reveals the concerns of 236 of Scotland’s senior business figures about leaving the EU. The report comes against a backdrop of a collapse in bank net lending. In the final two quarters of 2017, net lending to SMEs across 30 UK banks – 75 per cent of the UK lending market – was dwarfed by that from peer-to-peer lender Funding Circle.

The report shows that while banks are undertaking “significant planning” for their own businesses, little clarity is available on how they are preparing to support business customers.

Heather Buchanan, director of policy at Westminster’s All Party Parliamentary Group (APPG) for Fair Business Banking, told The National: “It’s incredibly interesting and relevant considering we are still dealing with all the misconduct issues from the last financial crisis ... anything that brings this into focus should be welcomed.

“The fact banks are preparing for themselves, without seemingly preparing for their customers brings forward some important questions.

“The financial services sector must acknowledge its wider social role and I hope this report provides a stimulus for proactive action and engagement with the business community. Despite everything that has happened in the past – evidenced by recent banking scandals such as those at HBOS Reading and RBS Global Restructuring Group, there is no new regulation to protect smaller businesses.”

Mullin said the research highlighted negative aspects of banking culture, with only 10 per cent of respondents having engaged with banks. He said: “This weakness in engaging with the SME sector and the lack of a duty of care to business customers seems to reflect negative aspects of current banking culture which have resulted in a fundamental lack of trust.

Thomson said there was a “built-in imbalance of power between SMEs and large banks” as well as a lack of trust. “Banks are meeting their obligations to the Bank of England to ensure they, as businesses, are able to cope in the event of a hard or chaotic Brexit,” she said.

“They must have sufficient cash reserves and assess their own business risk – but doing this could mean changes for their business customers, to their product terms or even the removal of some facilities in the worst cases. The functioning of an effective banking and financial system is critical for all sectors of the economy but as things stand there is a built-in imbalance of power between SMEs and large banks.

“Equally, the lack of trust is clearly evidenced by the fact that only one in ten respondents had approached their bank for Brexit advice. This is a serious disconnection and we need government – and the banks – to take some leadership and positive action to ensure that businesses get the support they need.”