Crunch time as firms seek bank justice

TENS of thousands of firms could be locked out of justice unless the Government launches a new system for businesses mistreated by their banks next week, campaigners warn.

Chancellor Philip Hammond is under intense pressure to address the issue of disagreements between small firms and their lenders in the Budget, which will take place a week on Monday.

Tory MP Kevin Hollinrake, who has been l eading the charge for an improved system as co-chair of the All Party Parliamentary Group on Fair Business Banking (APPG), met with Hammond, as well as City Minister John Glen, last week to urge them to change the law.

Last night, another bank backed The Mail on Sunday’s Justice For Our Firms campaign, which is calling for a new tribunal regime to help businesses hold their lenders to account.

Craig Donaldson, the chief executive of Metro Bank – a challenger to the big lenders – joined TSB in endorsing the tribunal plan, saying it is ‘ so important for British businesses that there is an effective dispute resolution service’.

The tribunal system is vital because a planned extension to the Financial Ombudsman Service, revealed last week, would only cater to firms with turnover of less than £6.5 million a year and fewer than 50 employees.

The APPG estimates 42,000 British companies would not fit within these parameters and so would have to seek justice by launching costly legal actions.

Ombudsman claims will also be limited to £350,000, and many firms mistreated by banks would have lost larger sums.

‘The vast majority – 90 per cent – of the cases I deal with fall certainly outside the £350,000 threshold,’ said Hollinrake, who regularly speaks to businesses caught up in the scandals surrounding GRG, Royal Bank of Scotland’s controversial turnaround unit, and Lloyds Banking Group’s HBOS Reading. ‘We need justice to be done.’

His intervention comes ahead of a crunch couple of days for the tribunal campaign. UK Finance – a body representing Britain’s banks – and the Treasury Select Committee are expected to set out their views on a tribunal later this week. The Treasury will then decide whether to push ahead with a tribunal in the Budget.