LONDON (Reuters) – Britain’s monetary complaints service may very well be revamped inside a 12 months to raised serve small companies, a report beneficial on Tuesday, rejecting calls from lawmakers for a brand new tribunal.
Relations between lenders and small companies have come into focus because the monetary disaster after some banks and their executives had been accused of asset stripping shoppers for private achieve.
The report, chaired by former Institute of Directors chief Simon Walker, stated a brand new division inside the Financial Ombudsman Service (FOS) may concentrate on disputes between banks and small and medium-sized firms (SMEs).
A brand new panel would advise the division on banking points, stated the report, which was commissioned by UK Finance, a banking commerce physique.
The advice is more likely to disappoint lawmakers who have expressed doubts that the FOS may deal with an expanded remit and argued that revamping the physique received’t go far sufficient.
Tribunals might be costly to run and use and would take years to legislate provided that parliament is clogged up by Brexit, the report stated. Revamping the FOS may very well be finished by mid-2019.
“The creation of a new tribunal vehicle solely for dealing with the financial sector would represent a significantly burdensome and bureaucratic addition to current UK legal infrastructure,” the report stated.
The All-Party Parliamentary Group on Fair Business Banking, a cross-party group of UK lawmakers who again the concept of a tribunal, stated the Financial Services Tribunal is supported by senior legal professionals and lots of banks, regardless of Walker dismissing the tribunal as merely being standard with politicians.
“We simply cannot accept that this would provide the holistic dispute resolution scheme that is required to make sure we level the playing field between business and banks and will continue our campaign until we do deliver the right solution,” the APPG on Fair Business Banking stated.
The FOS handles complaints that people and small companies have did not resolve with monetary companies. Many companies have complained they’re too huge to be eligible and the one different is a expensive court docket case.
The report stated banks handled small companies in a “cavalier manner” throughout and after the monetary disaster. “Loans were called in, many businesses suffered financial distress and some collapsed,” it stated.
Royal Bank of Scotland’s (RBS.L) Global Restructuring Group as an example has been accused by some small companies of stripping their belongings. The financial institution has stated it regretted errors made with some prospects.
The FOS can solely deal with complaints from companies that have a turnover of lower than 2 million kilos ($2.6 million) and fewer than 10 workers.
The Financial Conduct Authority stated final week that from subsequent April companies with fewer than 50 workers and annual turnover of lower than 6.5 million kilos will be capable of use the FOS, a giant enhance within the variety of eligible companies.
But in a bid to “bring closure” to disputes going again to the monetary disaster, Walker additionally beneficial banks ought to voluntarily conform to mechanisms for resolving disputes at companies with turnover of between 6.5 million and 10 million kilos.
These mechanisms may additionally deal with some legacy disputes that have not been handled by any court docket or arbitration physique.
UK Finance Chief Executive Stephen Jones stated the trade physique would work with banks and others on how finest to take the Walker suggestions ahead.
Reporting by Huw Jones; Editing by David Holmes