Business leaders still need to be convinced enough is being done to protect small companies from mistreatment by banks, new figures from the Institute of Directors show today. Last November UK Finance and the Financial Conduct Authority announced measures to give firms with turnover up to £10m the ability to seek redress if they have a dispute with their lender. However, in a survey of over 700 businesses, less than a third thought the new systems would be adequate, with a majority unsure.
A further proposal from the Treasury Select Committee, to create a new Financial Services Tribunal, was backed by nearly 7 in 10 IoD members in the survey. The Government does not support a new tribunal.
Edwin Morgan, interim Director General of the Institute of Directors, said:
“While disputes between businesses and lenders remain the exception not the rule, it’s right for the banking industry to take active steps to address concerns, particularly in the wake of some horror stories. However, many business leaders are sceptical of the new measures, and will take some convincing. If small businesses do not find the new system provides significantly improved access to redress, the clamour for further action will grow.
“The Government thinks that a tribunal would be more costly and less flexible for small businesses, and there seems no prospect of it being created in the short term. Our members have to hope that the current approach, combined with meaningful efforts to promote competition in the business lending sector, will serve to help level the playing field. The proof of the pudding will be in the eating, and we will be watching closely to see whether businesses get the fair treatment they deserve.”
Full survey results:
724 respondents, conducted between 5-20 December 2018
Have you ever been in a dispute with an external lender?
The Financial Conduct Authority has recently announced plans for greater access to the Financial Ombudsman Service for small companies (with annual turnover below £6.5m). UK Finance has also announced plans to provide larger SMEs (with turnover of £6.5m-£10m) access to an alternative dispute resolution scheme. Do you think these measures will provide SMEs with adequate access to redress if they are in dispute with a lender?
Separately, the House of Commons Treasury Select Committee has called for a new Financial Services Tribunal (similar to an employment tribunal) to handle SME disputes with lenders. To what extent would you support or oppose the establishment of a Financial Services Tribunal?
1 Strongly support
3 Neither support nor oppose
5 Strongly oppose