Top regulator demands justice for small firms
FCA chief: Company owners have nowhere to turn – give them an ombudsman NOW
SMALL firms are unable to obtain justice in their complaints against banks and the system needs an urgent overhaul, the City’s top regulator has told The Mail on Sunday.
Andrew Bailey, head of the Financial Conduct Authority, is calling on politicians to set up a new, independent process to deal with disputes between firms and lenders amid a growing row over how banks treat small and mediumsized business customers. This could be an independent ombudsman or a tribunal.
Television star Noel Edmonds gave a candid account in last week’s MoS of how he says his Unique Group business was treated by HBOS bankers a decade ago. Separately, victims of RBS’s distressed firms division are pressing for the FCA to publish in full a report into the controversial unit.
Bailey says there is a gap in regulation, leaving firms with nowhere to turn. While individuals can take grievances to the Financial Ombudsman, there is no provision for many firms. He said: ‘For issues such as RBS and its Global Restructuring Group, interest rate hedging, and complaints from small and medium-sized firms, there isn’t a proper dispute resolution process. I think there should be an ombudsman-style service for them.’
Bailey’s call was echoed by politicians yesterday. Charlie Elphicke, Conservative MP for Dover and Deal, who is on the Treasury Select Committee, said: ‘Small firms are the lifeblood of our economy, driving innovation and creating jobs. A powerful new ombudsman could help make sure they are treated fairly from now on.’
There is widespread agreement that arrangements to resolve complaints against banks by firms are i nadequate. Some f avour an ombudsman. But the All-Party Parliamentary Group for Fair Business Banking, which was set up to look at solutions to issues created by the bank misconduct over small firms, has been pushing for tribunals.
Heather Buchanan, director of policy for the group, said: ‘Institutions must not be allowed to be their own judge, jury and executioner on misconduct. It is imperative we have an independent, robust dispute resolution system that has full powers of disclosure.’
A spokeswoman for UK Finance, the trade body for UK lenders, said it was open to the idea. She added: ‘We are committed to working with Government, regulators, stake- holders and our members to unders t and whether t here may be benefits in extending protections and, if so, what the most appropriate ways to do that would be.’
But some victims say the proposals do not go far enough and want heavier monitoring – or for the big lenders to be dismantled.
Edmonds told The Mail on Sunday this weekend: ‘Bankers operate on the basis that they will flout the regulations, bend the rules and