Greg Wright: Why the new Prime Minister must create financial services tribunal and suspend the loan charge

Goodwill between business and the Government is at an all-time low, says Greg Wright. Photo: Steve Parsons/PA Wire
Goodwill between business and the Government is at an all-time low, says Greg Wright. Photo: Steve Parsons/PA Wire
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GOODWILL between business and the Government is at an all-time low

Many small firms have been exasperated by politicians’ failure to provide clarity over Brexit. They fear that nobody in the corridors of power really understands their hopes and fears.

As the election campaign to choose Mrs May’s successor begins in earnest, there are two simple steps that any budding Prime Minister could make to get businesses back on their side.

Firstly, they can make a commitment to establish a tough new tribunal that will protect small firms that have been bullied by the banks.

Secondly, they can state that they will order a suspension and review of the loan charge, a controversial policy that has attracted a chorus of disapproval across the political divide.

Let’s start with the concept of establishing a financial services tribunal, a proposal that has gained support from a large number of MPs and respected industry commentators.

When it comes to the best way of protecting small firms from rogue bankers, MPs, the Financial Conduct Authority and a host of respected business organisations have been speaking with one voice for some time.

They have been demanding that the Chancellor establishes a new, independent tribunal to ensure that small business owners who have been victims of banking misconduct gain speedy access to justice. The campaign to create the tribunal has been led by the All Party Parliamentary Group on Fair Business Banking, which believes a new tribunal is the best way to re-establish trust in the financial services sector.

In a 64-page report, the Treasury Select Committee also called for the establishment of a financial services tribunal to hear complex disputes between small firms and their banks.

The MPs expressed horror at the “scandalous” way the banks had been allowed to mistreat victims. The report called on the Treasury and the FCA to introduce a regulatory regime that protects small and medium-sized firms.

Waiting for another high-profile misconduct scandal before pursuing it would be irresponsible.

There is a real fear that the tribunal idea will be kicked into the long grass until the next crisis. This is a betrayal of every victim of rogue bankers. Any Tory leadership candidate who supports the proposed tribunal would receive a warm welcome from small business owners around Britain.

Any Prime Ministerial candidate with their finger on the pulse of political life must also support a suspension and a review of the loan charge, a measure which critics claim breaches the rule of law and is pushing victims to the brink of suicide.

Growing numbers of MPs are calling for an independent inquiry into the loan charge. The charge was introduced in response to the Treasury’s concerns about “disguised remuneration schemes” which involved individuals being paid through loans, usually via an offshore trust in a low or no tax jurisdiction, which they did not have to repay.

Critics say that the loan charge is retrospective and overrides taxpayer protections – claims that are disputed by the Treasury.

The All-Party Parliamentary Group on the Loan Charge, which carried out its own report into the charge, said: “There will be many bankruptcies as a result of the loan charge, reducing the estimated tax take and hitting the real economy. Some people will be forced to sell their homes and some people have already sold their homes.”

The Treasury says the charge means that people who paid themselves through loans, often from offshore trusts, will have to contribute their fair share to public services.

The APPG – which now has 151 members – argues that a substantial number of people, especially in the public sector, did not even understand their pay involved loan payments.

Workers such as nurses have been hit with unexpected tax bills for up to tens of thousands of pounds.

By supporting the planned financial services tribunal and a loan charge suspension, the leadership contenders will show a keen grasp of the big issues facing business.

It could help them secure the keys to Number 10.