SMEs of up to £6.5m-£10m in turnover should have access to a specialist panel within the Financial Ombudsman Service (FOS), said a UK Finance SME report released today by Simon Walker, former director-general of the Institute of Directors.
Following the announcement last week that the Financial Conduct Authority (FCA) would extend the FOS powers to help SMEs, the UK Finance-commissioned report has suggested a range of additional measures as the regulator starts to figure out the process for SMEs with the FOS.
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The UK Finance SME review was commissioned following the outcome of the Promontory RBS GRG report which revealed unsatisfactory lending outcomes for small businesses, with mainstream press attention spurring a review into SME complaints from the Treasury Committee and Business, Energy & Industrial Strategy (BEIS) Committee.
Walker and UK FInance SME suggestions
Walker’s proposed voluntary schemes to support businesses that fall beyond the remit of the FOS include a facility to resolve disputes with businesses that are not currently eligible – businesses with turnover between £6.5m and £10m, and a number of legacy claimants whose cases have not previously been dealt with by courts or dispute resolution schemes.
The report recommends that a dedicated SME division is created under FOS governance and within its legal framework. It advises that this division should handle all eligible disputes, including from small business and microenterprises, bolstered by the appointment of new specialist senior managers.
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By GlobalDataTo support the SME division of the FOS an expert advisory panel would be created to provide high-level guidance and deep expertise in complex banking disputes. This mirrors the existing FOS provision for consumer complaints. The panel would provide data and feedback to the regulator and would be chaired by a retired judge, with the support of leading industry professionals.
Following the publication of today’s report, independent chair of the UK SME Complaints and Resolution Review, Simon Walker, said: “In the aftermath of the Global Financial Crisis ten years ago, banks faced enormous pressure to reduce their risk exposure. Yet SME customers too often bore the brunt of this pressure and were clearly mistreated. With this report, our review seeks to provide a new route to redress for SMEs. Our recommendations would strengthen the infrastructure available to entrepreneurs wishing to challenge the behaviour of banks. Under the current system, too often SMEs have felt like David against Goliath.”
UK Finance SME response
Responding to Simon Walker’s SME Complaints and Resolution Review, chief executive of UK Finance Stephen Jones said: “Simon Walker’s report provides a valuable contribution to the ongoing debate on how to ensure SMEs have the most appropriate access to dispute resolution options that are efficient and unbiased when they feel things have gone wrong in their relationship with their banks.
“As this review acknowledges, a number of important changes have been made in the industry, but clearly there is more that can – and should – be done. UK Finance will now study the recommendations closely and work with banks, business representatives, the government and regulators to look at how best to take these forward to ensure fairer outcomes are delivered for SMEs.”
