MPs’ ac­tion call over pro­tec­tion of SMEs

Yorkshire Post - - FRONT PAGE - GREG WRIGHT DEPUTY BUSI­NESS ED­I­TOR ■ Email: [email protected]­me­dia.co.uk ■ Twit­ter: @greg­wrightyp

BUSI­NESS: MPs have ac­cused the Gov­ern­ment of lack­ing un­der­stand­ing of chal­lenges fac­ing busi­ness peo­ple who have been mis­treated by banks.

The All Party Par­lia­men­tary Group on Fair Busi­ness Bank­ing has crit­i­cised the Gov­ern­ment’s fail­ure to sup­port plans for a new tri­bunal to pro­tect SMEs from bank­ing mis­con­duct.

AN IN­FLU­EN­TIAL group of MPs has ac­cused the Gov­ern­ment of lack­ing a fun­da­men­tal un­der­stand­ing of the chal­lenges fac­ing busi­ness peo­ple who have been mis­treated by the banks.

The All Party Par­lia­men­tary Group (APPG) on Fair Busi­ness Bank­ing has crit­i­cised the Gov­ern­ment’s fail­ure to sup­port plans for a new tri­bunal to pro­tect SMEs (small and medi­um­sized en­ter­prises) from bank­ing mis­con­duct.

In­stead, the Gov­ern­ment be­lieves an om­buds­man-style ap­proach is prefer­able to a tri­bunal be­cause an om­buds­man has the abil­ity to make judg­ments based on what is “fair and rea­son­able” in the cir­cum­stances of the case. The Gov­ern­ment also claims that the om­buds­man of­fers a less ex­pen­sive process for SMEs and al­lows de­ci­sions to be made more quickly.

In its re­sponse to the Trea­sury Select Com­mit­tee’s SME fi­nance in­quiry, the Gov­ern­ment said: “The Gov­ern­ment is pleased that there is a con­sen­sus that ex­pand­ing el­i­gi­bil­ity to take a com­plaint to the FOS (Fi­nan­cial Om­buds­man Ser­vice) to more SMEs is the right thing to do.

“The in­tro­duc­tion of ‘small busi­ness’ as a new cat­e­gory of el­i­gi­ble com­plainant for the FOS, which is de­fined as busi­nesses with a turnover of less than £6.5m and ei­ther fewer than 50 em­ploy­ees or a bal­ance sheet of less than £5m, will give an ad­di­tional 210,000 SMEs ac­cess to the FOS, mean­ing that well over 99 per cent of busi­nesses will be el­i­gi­ble to take a com­plaint to the FOS from April 1 2019.”

The Gov­ern­ment said it wel­comed the FOS’s com­mit­ment to cre­at­ing a ring-fenced, spe­cial­ist unit sup­ported by a panel of ex­ter­nal SME ex­perts. The Gov­ern­ment has also sup­ported the Fi­nan­cial Con­duct Au­thor­ity’s con­sul­ta­tion on in­creas­ing the FOS award limit to £350,000.

In its re­sponse, the Gov­ern­ment said it noted the sug­ges­tions of both the APPG and Si­mon Walker, the for­mer Di­rec­tor-Gen­eral of the In­sti­tute of Di­rec­tors, that there should be ac­cess to a dis­pute res­o­lu­tion ser­vice for busi­nesses above £6.5m turnover.

The re­port added: “The Gov­ern­ment be­lieves that the bank­ing in­dus­try’s pro­posal to es­tab­lish a vol­un­tary om­buds­man scheme by Septem­ber next year to re­solve com­plaints from busi­nesses with a turnover be­tween £6.5m and £10m rises to this chal­lenge.

“It is the Gov­ern­ment’s view that busi­nesses with a turnover greater than £10m can rea­son­ably be ex­pected to be in a po­si­tion to go to court.”

In a state­ment, the APPG said: “The Gov­ern­ment’s re­sponse demon­strates a fun­da­men­tal lack of un­der­stand­ing of the chal­lenges that busi­nesses face when re­solv­ing dis­putes with their fi­nance providers.

“The ques­tion is not, as the Gov­ern­ment sug­gests, whether an om­buds­man-style ap­proach is prefer­able to a tri­bunal.

“We have recog­nised, as have the FCA, that these two ap­proaches are com­ple­men­tary and meet dif­fer­ent needs for dif­fer­ent types of dis­putes. The om­buds­man pro­vides a quick, af­ford­able and in­for­mal mech­a­nism for the vast ma­jor­ity of low-value claims.

“But the Gov­ern­ment must recog­nise the lim­i­ta­tions of an om­buds­man-style ap­proach and recog­nise the fact that the el­i­gi­bil­ity re­quire­ments, and award level limit, cre­ate a gap in ac­cess­ing jus­tice which must be filled by a Fi­nan­cial Ser­vices Tri­bunal.”

The co-chair of the APPG, Kevin Hollinrake MP, said: “It is an en­tirely un­rea­son­able propo­si­tion to sug­gest that a busi­ness with a turnover greater than £10m can be ex­pected to be in a po­si­tion to go to court.

He added: “The APPG is fre­quently con­tacted by busi­ness own­ers, who have a turnover more than dou­ble that fig­ure, but are un­able to take a multi-na­tional fi­nan­cial in­sti­tu­tion to court. There is no way that this can be put for­ward as a com­plete so­lu­tion.”

KEVIN HOLLINRAKE: The MP is a prom­i­nent sup­porter of the pro­posed tri­bunal.

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