An organisation set up to help small Welsh companies grow has been branded not “fit for purpose” by a leading academic.
Professor Dylan Jones-Evans has claimed Finance Wales is more focussed on behaving like a bank and concentrating on profits than helping SMEs to flourish.
Prof Jones-Evans, from the University of the West of England, has conducted a review of access to funding at the request of Economy Minister Edwina Hart.
In the first part of his report, published earlier this year, Prof Jones-Evans said there was confusion about the role of Finance Wales, which is owned by the Welsh Government.
In the second part o his report, published on November 12, Prof Jones-Evans wrote: “It remains unclear as to whether Finance Wales is still essentially operating as a commercially oriented fund manager in all but name.
“Given this, the minister may have a view as to whether Finance Wales is fit for purpose or whether the organisation needs to be taken in-house into the Welsh government so that it can focus on its economic development role for the Welsh economy.”
The professor has said Finance Wales should now be rolled into a new “one-stop-shop” called Development Bank of Wales.
In response to the publication of the report, Economy Minister Edwina Hart told AMs: “In undertaking his review, the professor has carried out extensive engagement seeking views across the banking sector and other financial institutions, intermediaries, academia and the wider business community.
“I would like to thank all individuals and organisations who have contributed to the review, particularly Finance Wales for their full and frank engagement. The review has raised important challenges for both private sector and Government that need full and thorough consideration.
“The full scope of the professor’s recommendations will require further investigation and a short consultation period will now open.
“During this period he will consult with a number of Social Partners, such as the trade unions and Commerce Cymru.
“I would also call on the business community, SMEs, investors, financial institutions, intermediaries and member bodies to come forward with their views to help drive in this vital area.”
The Federation of Small Businesses has called for the bosses of Finance Wales to face AMs.
Spokesman Rhodri Evans said: “The findings of this second comprehensive and in-depth report from Professor Dylan Jones-Evans confirm our very worst fears about the way that Finance Wales has been operating and the exorbitant interest rates that it has been charging small businesses in Wales.
“It has been charging these inflated rates at a time when small businesses needed its support the most, and yet, despite this, has reported millions of pounds of losses in the past two years.
“In light of this report we would call for the chief executive and senior managers of Finance Wales to be called to account and brought before AMs to explain the decisions that have resulted in small firms being let down so badly.”