By Timothy Adler on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs
UPDATED: Kevin Hollinrake MP, a member of the Treasury select committee, has called for the small business banking dispute service to be scrapped.
The Times has reported that the Business Banking Resolution Service (BBRS) has only overseen six financial awards almost two and a half years since it began accepting cases.
The BBRS, a voluntary ombudsman set up to handle any banking dispute between small businesses and high-street banks, has cost at least £23m to establish.
The ombudsman was set up after thousands of companies were damaged by banking scandals. It gives small businesses an independent view on banking disputes. It is funded by seven banks but is independent of them.
According to The Times, there have been just six financial awards – including modest “distress and inconvenience” payments – regardless of whether complaints were upheld.
The BBRS did not tell the newspaper how many of these pay-outs had been the results of upheld complaints and declined to say how much has been paid out.
Since launch, the BBRS has been criticised for having unwieldy eligibility criteria, for example only being open to larger SMEs with turnover of up to £10m per annum and assets of up to £7.5m. The Financial Ombudsman Service (FOS) continues to handle disputes on behalf of smaller SMEs.
Mr Hollinrake, a Conservative MP, told the newspaper that “heavily restricted eligibility rules” were to blame for the scheme’s poor performance and these rules had “conspired to avoid the very things we’ve campaigned so long and hard for — justice and compensation for those who’ve been denied it under previous flawed redress schemes.”
He said the scheme should be scrapped in favour of increasing qualification limits for businesses at the FOS.
As of the end of March, the SME banking dispute service has only received 776 “registrations”, 161 of which were still “live”. At launch the BBRS said it expected to be investigating anything up to a thousand cases.
However, the BBRS told SmallBusiness that, as of 31 March, it had reached 22 settlements of which 12 were negotiated directly with banks via ADR (Alternative Dispute Resolution), eight were financial settlements via the BBRS following adjudication, and two cases were resolved via conciliation.
The Federation of Small Businesses called the figures “really disappointing” and said that those involved should “work full tilt” to improve the service.
A spokesman for the BBRS told SmallBusiness: “It is important to remember that we are subject to the eligibility criteria that have been set for us by policymakers in response to the Walker Review, as endorsed by the Implementation Steering Group, and we can only look at cases that fall within those set criteria. The number of outcomes we can deliver is dependent on the number of eligible cases we receive, and we continue to encourage everyone with an eligible complaint to come forward to register with us.
“We are leaving no stone unturned to encourage eligible customers to register with us and will soon be launching campaigns to find both historic and contemporary cases. We urge all small and medium sized businesses with outstanding banking disputes to see if they are eligible for support using our quick online tool.”
Further reading
What is the Business Banking Resolution Service (BBRS)?
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