Kevin Hollinrake, the vice-chairman of the All Party Parliamentary Group on Fair Business Banking (APPG), plans to make the case for establishing an independent financial services tribunal that would be paid for by the banks when he meets Stephen Barclay, the Economic Secretary to the Treasury, next month.
A spokesman for the APPG said it had gained “widespread acceptance” that there is a gap in protection for businesses who believe they have a grievance against the banks.
The spokesman said: “Our next focus must be on ensuring that the correct system is implemented, and the group is concerned that we will end up with an extended version of the Financial Ombudsman Service (FOS), which is not suitable for complex financial disputes.”
Mr Hollinrake, who is the Conservative MP for Thirsk and Malton, told The Yorkshire Post: “The proposed expansion of the FOS is a wholly insufficient remedy and we need an independent financial services tribunal, funded by the banks themselves. This would provide SMEs (small and medium-sized enterprises) with an affordable route to justice when things have gone wrong, finally giving thousands of businesses access to a proper redress mechanism.
“This will also help to restore fairness to the system and confidence in our banks, which in turn should see more businesses start up and scale up.”
He added: “SMEs have nowhere else to go but take whatever money is offered through the FOS. We need to give those SMEs the chance to see their bank’s documents and have their ‘day in court’. If we don’t do this, bad behaviour by banks will continue just as before.”
He added: “There already is a financial services tribunal, which is run by Her Majesty’s Courts and Tribunals Service and operates under the Courts, Tribunals and Enforcement Act 2007.
“It is staffed by senior members of the judiciary who co-opt expertise from the relevant markets to sit alongside them. All it would need is expansion of capacity of an existing chamber, or creation of a new one, by statutory instrument. No primary legislation is necessary. The principle is that the banks would pay for it. “
Mr Hollinrake said that the banks already pay for the Financial Conduct Authority’s ad-hoc redress schemes, which the banks administer themselves.
A HM Treasury Spokesman said: “It is important that small and medium sized enterprises (SMEs) have access to the appropriate forum to address their concerns with the financial services that they have received.
“We therefore welcome the FCA’s (Financial Conduct Authority’s) continued work to support small business, and their proposed consultation on giving larger SMEs access to the Financial Ombudsman Service.”
The spokesman added: “We will consider the FCA’s findings when they are published.”