Business banking resolution scheme will place UK at the cutting edge, says UK Finance

A new service which aims to provide justice for small firms who believe they have been victims of banking misconduct will place Britain at the cutting edge of dispute resolution reform, according to a senior figure at the trade association for the banking industry.

Stephen Pegge managing director, Commercial Finance at UK Finance

Stephen Pegge, the managing director for commercial finance at UK Finance said the new Business Banking Resolution Scheme (BBRS) went beyond dispute resolution services which are available in most other countries. He said the BBRS could also create a “virtuous circle” by highlighting models of good practice.

He added: “It can make decisions on what is fair and reasonable.”

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Mr Pegge said the BBRS, which is due to go live in 2020, aimed to provide an efficient and simple resolution system, while preserving relationships between the SME (small and medium-sized enterprise) and the bank.

He said the industry was keen to press ahead with the scheme, adding: “Let’s get it (the BBRS) up and running”.

The BBRS is a non-profit organisation set up to resolve disputes between eligible SMEs and participating banks. It has been created after the Walker Review into alternative dispute resolution for SMEs received evidence from trade associations and those who saw themselves as victims of bad banking practice.

The review recommended that an Ombudsman type service be established for firms with a turnover between £6.5m to £10m. The review concluded that the use of a “fair and reasonable” test in a dispute, rather than the legal basis used by a tribunal, would give better outcomes for SMEs.

The BBRS will aim to provide a dispute resolution service for new disputes for larger SMEs. It will also allow historic cases to be reviewed if they have not already been considered by an independent review process and meet the eligibility criteria.

Stephen Jones, the chief executive of UK Finance, added: “The vast majority of SMEs now have fast and free access to the, recently extended, Financial Ombudsman Scheme.

“And, once established, and when combined with the Financial Ombudsman Service, 99 per cent of SMEs will be eligible for the BBRS, an independent dispute resolution scheme. “

He added: “These routes are free to use for SMEs, do not require separate representation and make decisions on the basis of what is fair and reasonable.”

Mr Jones said the industry was committed to creating a resolution service for businesses that is trusted, transparent and fair, with help from MPs and other groups.

Around 60,000 businesses will be eligible for the historic part of the BBRS scheme, should they wish to use it, according to UK Finance.

Stephen Pegge of UK Finance said BBRS offered a “relatively, quick, efficient and simple service” which would be better for SMEs and also hold the industry to a higher standard.

He said a recent survey found that 55 per cent of SMES in Yorkshire had a high level of trust in their bank.