According to the official figures released earlier this year from the Insolvency Service, insolvency is still on the rise for small businesses across the UK.

It therefore follows that the Independent Commission on Banking (ICB) report a couple of weeks ago was not what small businesses across the UK wanted to hear.

Reforms suggested by the ICB will ring-fence deposits from investment banking to protect taxpayers from any future banking failures. On the face of it, these may seem like a sensible proposal to protect individuals and smaller businesses from the risks of investment banking which many feel caused the recent banking crisis.

However, the Confederation of British Industry (CBI) believes the planned banking reforms could have a serious adverse affect for small businesses. Dr Neil Bentley, CBI deputy director general said, “‘¦some of the services that might be prohibited within the ring-fence, such as exchange rate hedging and other risk management procedures, could increase costs for firms to access critically important financial services.’

The British Chamber of Commerce is also concerned about the potential effect on the reforms on small businesses. John Longworth, the organisation’s director-general, said: “We cannot afford to see collateral damage among Britain’s small businesses as a consequence of banking reform. While there is clearly a need to ensure our banking system is robust, we must ensure that new regulations, however desirable in principle, do not inadvertently derail the recovery or hinder businesses’ access to finance.”

As a legal adviser to small businesses across the UK, I feel that any negative impact that these reforms could have on small businesses needs to be avoided. The proposed reforms do not seem to fit well with David Cameron’s recent pledge to cut down on ‘Red-Tape-Britain’ and take out the “enemies of enterprise” and “those ridiculous rules and regulations that make life impossible for small firms”.

The banks have been given until 2019 to implement these reforms so there is still the possibility of these proposals being altered so as to ensure the banking system helps to protect small business across the UK, rather than adding an extra layer of needless bureaucracy to their funding requirements.