Business Banking Resolution Service
Debate between William Wragg and Kirsten Oswald(1 year, 5 months ago)
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Mr Wragg
The hon. Lady makes a valid, important and sensible point. I will touch on a suggestion towards the end of my remarks.
In the course of its inquiry, the Treasury Committee considered the long-standing and very large gap in provision of a financial dispute resolution service for SMEs, between those eligible to refer a complaint to the Financial Ombudsman Service and those with access to enough money, appropriate legal representation, and sufficient courage and time to be able to sue their bank. A similar shortfall was identified in the APPG’s “Fair Business Banking for All” report.
Kirsten Oswald (East Renfrewshire) (SNP)
We should not underestimate the hon. Member’s point about the unreasonableness of expecting those who find themselves in that situation to have huge amounts of courage. I want to make that point on behalf of my constituents who have huge amounts of patience, courage and grit to right what in their case has been a very significant wrong. They would absolutely like to see an independent tribunal service. They describe the current system as a shambles and I do not disagree with them. Their trust is completely shattered by any measure. All of the resolution processes have failed. Does the hon. Member agree that there are people all over the UK who deserve significantly better?
Mr Wragg
Absolutely so. The courage of those small and medium-sized business owners is not to be underestimated. I have dealt with constituents whose cases go back decades. They have had more than patience; they have had the utmost resilience. Many would have given up by now, but such is the injustice—the wrongs that we need to right—that we must, on their behalf, respond with similar courage.
The expansion of the remit of the Financial Ombudsman Service in 2019 to include more SMEs and increase the maximum award level narrowed the gap to some extent, but did not close it. Neither has the gap been plugged successfully by the ad hoc redress schemes established by banks in the years following the 2007 financial crisis for those impacted by scandals such as the interest rate hedging product mis-selling, the mistreatment of small business customers by the Royal Bank of Scotland Global Restructuring Group and the HBOS Reading fraud.
The schemes that have been set up have all been heavily criticised for, among other things, a lack of independence and overly restrictive eligibility criteria. It was against that backdrop that the BBRS was established as a voluntary initiative to the specifications of, and funded by, seven participating UK banks. It was intended to help rebuild trust among the SME community by resolving historical and contemporary disputes between banks and those businesses. It thereby filled a gap in dispute resolution and redress.