Commercial Financial Dispute Resolution Platform

Debate between Lord Hanson of Flint and Simon Kirby

Thursday 15th December 2016 Commons Chamber

[The Economic Secretary to the Treasury (Simon Kirby)]

I thank the hon. Member for East Lothian (George Kerevan) for securing this debate and, to be fair, for his very thoughtful and measured speech. We certainly acknowledge the importance of the issues that have been raised today.

As a former businessman, I have a great deal of sympathy with all the businesses that have been mentioned and, indeed, all the other businesses that have been treated unfairly. As has been clearly shown by the speeches today, we all care about the businesses that form the backbone of our economy. We should never forget that businesses are more than just numbers; they are people, families, employees, customers and local communities.

This Government have a very strong record of supporting large and small companies, including through our competitive tax regime and our investment in skills, research and infrastructure. Clearly, one way that businesses are able to grow and develop is through having access to finance, so we all want financial services providers to lend to our businesses and to act in the strictest accordance with the FCA’s rules. Wherever that is not the case, any affected business should be compensated appropriately.

We have already heard about the avenues that exist for SMEs in dealing with their banks—from the Financial Ombudsman Service to the FCA’s powers to require firms to establish redress schemes—but it is right to look at the interactions of small businesses with financial services providers to ensure that their dealings are fair and effective. The FCA is already doing that. It launched a discussion paper on SMEs as users of financial services in November 2015. Among other things, that looks at the remit of the FOS in providing fast and inexpensive redress for consumers and our smallest businesses. The FCA is currently analysing the responses to the discussion paper, but when its findings are published, we will consider them very closely. Let me make it clear that if they include the need to review the support for businesses in resolving financial disputes, we will look at that.

It is important for me to reflect on the specific comments made today. There have been quite a few, but I shall do my very best to cover most of them. The hon. Member for East Lothian asked about reforming insolvency law. He may be pleased to hear that the Government keep insolvency law under regular review, and we are currently considering the responses to our recent review of the corporate insolvency framework.

The hon. Gentleman mentioned Andrew Bailey. As Andrew Bailey made clear in his letter to the hon. Gentleman yesterday, the FCA is considering the treatment of small and medium-sized enterprises as users of financial services. It has yet to publish the findings from that work, but, again, if they include the need to review the support for businesses in resolving financial disputes, we will look at that.

I fully recognise the hon. Gentleman’s views about RBS, the Global Restructuring Group and its treatment of small business. I share those concerns and am keen to discuss with RBS the detail of the redress scheme it announced recently for former customers of GRG.

I thank my hon. Friend the Member for Henley (John Howell) for his support for alternative dispute resolution. We welcome businesses using alternative methods to resolve disputes.

The right hon. Member for Delyn (Mr Hanson) raised concerns about the quality of the IRHP review. The Treasury Committee has recommended that the FCA should learn lessons and the FCA has confirmed that it will do so once legal proceedings are at an end. He also mentioned access to the Financial Ombudsman Service. The FCA estimates that 97% of small businesses have access to the FOS and the Government believe the FOS plays a crucial role for small businesses.

The right hon. Gentleman asked an important question about the British Business Bank’s enterprise finance guarantee scheme. At the instigation of the British Business Bank, RBS conducted an in-depth internal investigation of its administration of the EFG. RBS put in place a plan to rectify the issues identified and has concluded remediation action with affected customers.

[Mr Hanson]

Will the Minister give way?

[Simon Kirby]

I will not give way, but perhaps we might speak afterwards. I have an awful lot of things I have to address.

My hon. Friend the Member for Wycombe (Mr Baker) asked about incentives to discourage misconduct. The Government and regulators have acted to embed personal responsibility in banking through the senior managers and certification regime. He also stated that small businesses should be treated as consumers.