‘Spread­sheet Phil’ bot­tled his chance to pro­tect SMEs

Yorkshire Post - Business - - BUSINESS / NEWS - Greg Wright DEPUTY BUSI­NESS EDITOR @greg­wrightYP

WHEN the Chan­cel­lor sits down to write the Bud­get, he nor­mally has to con­tend with a cho­rus of com­pet­ing voices.

But when it comes to the best way of pro­tect­ing small firms from rogue bankers, MPs, the Fi­nan­cial Con­duct Author­ity and a host of re­spected busi­ness or­gan­i­sa­tions have been speak­ing with one voice for some time.

They have been de­mand­ing that the Chan­cel­lor es­tab­lishes a new, in­de­pen­dent tri­bunal to en­sure that small busi­ness own­ers who have been the vic­tims of bank­ing mis­con­duct gain speedy ac­cess to jus­tice.

But ‘spread­sheet Phil’ bot­tled it. In­stead, he took the path of least re­sis­tance. He wel­comed plans to ex­pand ac­cess to the Fi­nan­cial Om­buds­man Ser­vice (FOS) to small and medi­um­sized en­ter­prises (SMEs) with a turnover up to £6.5m. The FOS will now take steps to en­sure it has the nec­es­sary skills and pro­cesses in place to han­dle these new cases, the Chan­cel­lor’s Bud­get said.

There was no men­tion of the tri­bunal plan. Mr Ham­mond didn’t even ac­knowl­edge that the tri­bunal idea had gained wide sup­port, al­though he did praise the work of Kevin Hollinrake MP in keep­ing the plight of the banks’ vic­tims in the pub­lic eye.

The Chan­cel­lor’s fail­ure to back the tri­bunal plan prompted a fu­ri­ous re­sponse on so­cial me­dia.

“Never for­get the harm that banks have done,” said one com­men­ta­tor on Twit­ter.

The All Party Par­lia­men­tary Group on Fair Busi­ness Bank­ing, which has led the cam­paign to cre­ate a tri­bunal, vowed to fight on.

Mr Hollinrake, the group’s cochair­man said: “We main­tain our long-stand­ing po­si­tion that an ex­tended om­buds­man alone is not suf­fi­cient to deal with the sig­nif­i­cant is­sues that busi­ness peo­ple face when ac­cess­ing jus­tice.”

The SME Al­liance tweeted: “We imag­ine there could also be a back­lash from the huge SME sec­tor who will see this as a real be­trayal given even the Trea­sury Se­lect Com­mit­tee (TSC) and the Fi­nan­cial Con­duct Author­ity (FCA) sup­ported a tri­bunal.”

In a 64-page re­port, the TSC called for the es­tab­lish­ment of a fi­nan­cial ser­vices tri­bunal to hear com­plex dis­putes be­tween small firms and their banks.

The MPs ex­pressed hor­ror at the “scan­dalous” way the banks had been al­lowed to mis­treat vic­tims.

The re­port called on the Trea­sury and the FCA to in­tro­duce a reg­u­la­tory regime that pro­tects small and medium-sized firms.

“Wait­ing for an­other high-pro­file mis­con­duct scan­dal be­fore pur­su­ing it would be ir­re­spon­si­ble,” it said.

“Given the Com­mit­tee’s con­cerns about the FOS’ ca­pa­bil­ity, broad­en­ing its re­mit be­yond the FCA’s pro­pos­als would be un­wise and po­ten­tially dam­ag­ing,” the re­port said. Ear­lier this year, the FCA’s An­drew Bai­ley, ar­gued that a tri­bunal could pro­vide a more for­mal, court-like ap­proach for higher value dis­putes, or dis­putes in­volv­ing com­plaints above the Om­buds­man’s el­i­gi­bil­ity thresh­olds.

But what was the Chan­cel­lor’s re­sponse to these wise words of ad­vice?

He ig­nored the tri­bunal idea and de­cided to add to the FOS’s al­ready heavy work­load. Estab­lish­ing a tri­bunal would take time and ef­fort, but it would be worth it be­cause it would shore up con­fi­dence in the bank­ing sec­tor and en­sure vic­tims of mis­con­duct gained jus­tice.

There is a real fear that the tri­bunal idea will be kicked into the long grass un­til the next cri­sis. This is a be­trayal of ev­ery vic­tim of rogue bankers. It is an ap­proach that flies in the face of ex­ten­sive re­search from MPs.

To quote the TSC re­port: “The Trea­sury and the FCA should in­tro­duce a reg­u­la­tory regime that pro­tects SMEs. The scope of the regime must be based on an ap­pre­ci­a­tion of the vary­ing lev­els of fi­nan­cial so­phis­ti­ca­tion within the SME com­mu­nity.

“This will re­quire anal­y­sis of the fi­nan­cial so­phis­ti­ca­tion of the UK’s SMEs that goes be­yond blunt met­rics cov­er­ing head­count and turnover.”

It’s hard to un­der­stand why the Chan­cel­lor did not speak out in favour of a tri­bunal.

The only bankers who should fear a fi­nan­cial ser­vices tri­bunal are those who ought to have no place in a re­formed bank­ing sec­tor.

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