In the Budget, the Chancellor Philip Hammond welcomed the Financial Conduct Authority’s (FCA’s) plans to expand access to the Financial Ombudsman Service (FOS) to small and medium-sized enterprises (SMEs) with a turnover of up to £6.5 million, along with its consultation on increasing the FOS award limit to £350,000.
The FOS will now take steps to ensure they have the necessary skills and processes in place to handle these new cases, the Budget “red book” said.
Last week, the Treasury Select Committee (TSC) concluded that a disputes tribunal underpinned by new regulation is needed to protect small companies after their “scandalous” treatment by banks. In a 64-page report on SME Finance, the committee said a financial services tribunal should be set up to hear complex disputes between small firms and their banks.
The FCA has already approved an expansion of the FOS’ remit from next April to deal with a wider range of small companies, but this would still leave a big gap for larger and more complex disputes, the report said.
“Given the Committee’s concerns about the FOS’ capability, broadening its remit beyond the FCA’s proposals would be unwise and potentially damaging,” the report said.
Kevin Hollinrake MP, the co-chairman of the All-Party Parliamentary Group on Fair Business Banking (AAPG), said he was pleased that Mr Hammond had recognised the work of the APPG, and the Treasury is working with the FCA to expand the work of the FOS for larger SMEs.
He said: “While the APPG are pleased that the Government has recognised the work of our group and the gross injustices that many face when resolving disputes with their banks, we maintain our long-standing position that an extended ombudsman alone is not sufficient to deal with the significant issues that business people face when accessing justice.
“The TSC, the FCA, The Federation of Small Businesses, the Small Business Commissioner and many banks support our calls for the introduction of a financial services tribunal to bridge the justice gap. We will continue to press for its introduction.”
The Financial Conduct Authority has backed plans for a new tribunal to protect small firms who have been mistreated by the banks.
Members of the All Party Parliamentary Group on Fair Business Banking (APPG) have also been calling for the establishment of a new tribunal to defend SMEs after they voiced concerns that the current financial regulatory system is not strong enough.
Kevin Hollinrake MP, the co-chairman of the APPG, believes action is needed to ensure bosses of small firms with a legitimate grievance against the banks have access to justice.