Small businesses will be able to use a new, free and independent service to help them resolve disputes with their banks, in a boost for SMEs struggling in the current crisis
The Business Banking Resolution Service (BBRS) is a new dispute resolution service set up to resolve disputes between eligible small and medium sized businesses and participating banks. The BBRS is being established in accordance with a voluntary commitment in response to the Simon Walker Review on the small business complaints landscape.
It will use alternative dispute resolution techniques to settle unresolved complaints from larger SMEs with seven participating banks, who make up the majority of the business banking market.
There will be an awards limit of £350,000 for the historic scheme and £650,000 for the forward-looking scheme to be moved to a default position whereby the full amount of any claim should be paid without limit.
The event date of mistreatment has also been extended from the original claim date of 2008, which has been moved back to claims dating from 2001.
The scheme also allows for former directors and shareholders of dissolved entities to be eligible to bring complaints so that the dissolved entity can be considered.
It is hoped that the BBRS will give SMEs added confidence to take out loans and other business banking products and services knowing that, if something goes wrong, they have a route to independent resolution. An improved climate for investment will be much-needed as the economy seeks to recover.
The service has been two years in the making and has been set up on a voluntary basis with small business groups and banks working together. The setting up of the BBRS comes after a sustained campaign by SMEs, who have argued for a wider means of resolving disputes.
The BBRS will work to settle unresolved complaints from customers of the financial institutions who have signed up. The banks are: Barclays Bank PLC and Barclays Bank UK PLC; Danske Bank; HSBC UK Bank plc; Lloyds Banking Group (Lloyds Bank plc and Bank of Scotland plc); NatWest Group (including The Royal Bank of Scotland Plc, National Westminster Bank plc, Coutts & Company and Ulster Bank Limited (Northern Ireland)); Santander UK plc; and Virgin Money (including Clydesdale Bank PLC and Yorkshire Bank). It is hoped that more banks will join in future.
The BBRS offers an alternative to litigation, removing the cost and stress of going to court. Its decision-making is led by Alexandra Marks CBE, chief adjudicator and a Deputy High Court Judge, who will be able to decide cases on the basis of what is fair and reasonable in the particular circumstances of each case.
The service has been designed to be easy to access, empathetic and flexible in its approach. Each business using the BBRS will have a ‘Customer Champion’, who will act as a guide to the service and how to use it.
The BBRS will look at two types of unresolved complaint:
the contemporary scheme covers cases for the period from 1 April 2019 onwards: it is for businesses with a turnover up to £10m per annum; and total assets up to £7.5m; and which are not eligible to take their complaint to the Financial Ombudsman Service.
The historical scheme covers cases for the period from 1 December 2001 to 31 March 2019: it is for businesses with a turnover up to £6.5m per annum; and total assets up to £5m; and which were not eligible to take their complaint to the Financial Ombudsman Service and have not had access to an independent review.
The service has already registered around 450 cases, 48 of which were taken into its 2020 Live Pilot. These cases have been through the initial stages of the BBRS process, and will be contacted by their Customer Champion with further information within the early weeks of the BBRS’ operation.
The BBRS will also be able in certain circumstances to consider cases that are ineligible under its rules where the bank and customer collectively agree, meaning the service has a wider scope than originally anticipated.
Overall, there are six million SMEs in the UK of which approximately 200,000 are larger SMEs who will fall within the BBRS’ turnover band. While uncertain economic circumstances make it difficult to predict how many contemporary complaints it might receive, the BBRS estimates that up to 5,000-6,000 cases will be registered over a three-year period for the historical scheme.
The BBRS has engaged the Centre for Effective Dispute Resolution (CEDR) to provide flexible case-handling capacity to support the delivery of the service alongside the BBRS’ own in-house team.
Martin McTague, Federation of Small Business (FSB) national vice chair, said: ‘Access to finance will be absolutely critical to small firms as the economy recovers. That’s why it’s been worrying to see some stuck between a rock and a hard place where redress is concerned: too big for the Financial Ombudsman Service, too small for the courts.
‘We believe the BBRS can provide a meaningful option for these firms in future. Delivery is key, and we’ll work closely with the service to ensure it is fulfilling its function effectively. We continue to urge all major financial lenders to sign up to the BBRS, resolving historical claims where possible as they do so.’
The BBRS’ independent chair, Lewis Shand Smith, said: ‘I am delighted the service is now fully operational. The BBRS will enhance SME and banking relationships by giving larger SMEs a free and easy to use dispute resolution service.
‘By working with us voluntarily to develop this independent service, the participating banks and SME business groups have made an important contribution to supporting economic recovery among small businesses. By restoring trust, it will give businesses the confidence to borrow, leading to an improved climate for investment.
David Postings, chief executive of UK Finance, the banks’ trade body which helped set up the BBRS, said: ‘The launch of the BBRS delivers a new resolution service that is trusted, transparent and fair, and follows considerable positive engagement from all groups involved. Now 99% of small businesses will have access to this new resolution service or to the Financial Ombudsman Service.’
Paul Scully MP, minister for small business, consumers and labour markets, said: ‘It has been a testing year for so many of Britain’s small businesses, and we have undertaken unprecedented measures to keep alive the creativity, dynamism and entrepreneurial spirit which they bring to every sector of the economy and every community across the country.
‘Services like the BBRS will play a vital role in ensuring small business owners can access expert advice and have their voices heard.’