SME banking disputes must be resolved to make way for growth

The issue of SME banking disputes remains a critical issue for business. If we are to continue to rebuild trust between SMEs and the banks that serve them, we need solutions that not only deal with the legacy of the past but also are capable of facing the challenges of tomorrow.

What are SME banking disputes?

There have been a number of issues regarding SME banking, including high-profile cases where banks have accepted shortcoming and apologised in terms of their service to small and medium sized businesses. The CBI recognises the work undertaken by the FCA and UK Finance on this critical issue over the last two years. CBI members, including the CBI’s Sem Council, comprising of 50 leading SMEs from across the UK, broadly support the proposals put forward by the FCA, to ensure more small businesses can access vital support and advice when they need it most.

CBI members welcomed the extension of the FOS threshold announced by the FCA from the current ‘micro enterprise’ definition to ‘small firms’, which would move the threshold to under 50 employees or £6.5m in turnover, meaning over 200,000 additional SMEs will have access to the ombudsman service.

Building on the independent Simon Walker Review on the small business complaints landscape, the is a member of the Independent Steering Group for the industry-driven voluntary redress scheme to work with all parties to make even further progress in the interests of members.

Why does this matter for business?

SMEs want to know what finance is out there, real options now and in the future, to know what they are getting and a grown-up relationship with their bank. Key to this whole agenda is trust, building relationships that equip SMEs to weather their growth journey.

A mechanism that can provide swift, fair and reasonable adjudications to deal with complex disputes will build on the welcome extension of the remit of the Financial Ombudsman Service. Whilst there remains much to be done, the banking industry’s response is building a platform for the future.

What’s next?

The Business Banking Resolution Service is being established in accordance with a voluntary commitment made by the banking and finance industry. The BBRS will be flexible in the way it resolves disputes, adopting approaches that are most appropriate for each case, and will be guided by the commitment “to do and be seen to do what is right, fair and reasonable at all times”. A live pilot will be launched in December 2019.