Barrister: UK courts ‘failing small firms’

COURTS are failing small businesses by routinely siding with banks on major legal actions, according to a senior commercial barrister.

Paul Marshall, who has acted in major banking cases, said judges tend to decide in favour of banks because their contracts give them the power to behave however they like.

Mr Marshall believes small firms should instead be entitled to rely on the bank’s ‘good faith’ when entering into agreements. Writing in the Journal of International Banking and Finance Law, he said: ‘Common law, where not otherwise required to do so, starts from the premise that the purchaser must look after himself.

‘The concept of “good faith” provokes an almost allergic response among judges. Both the courts and financial services law have signally failed small and medium-sized enterprises.’

The Mail on Sunday has been campaigning for small businesses to have the right to bring cost-effective claims against banks at a new tribunal or ombudsman-style service. It is difficult at present for small companies to bring high court claims because costs run into millions of pounds. Mr Marshall’s comments suggest further that claimants face an uphill battle in getting redress.