Banking resolution service comes under withering criticism

  • 07 Jun 2022

Ombudsman failing SMEs, say critics

Calls have been increasing for the Business Banking Resolution Service to be either reformed or completely scrapped little more than than two years since it was launched.

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. 

 

Kevin Hollinrake MP, a member of the Treasury select committee, has called for the small business banking dispute service to be scrapped.

It has been 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 – including modest “distress and inconvenience” payments – regardless of whether complaints were upheld.

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 continues to handle disputes on behalf of smaller SMEs.

Mr Hollinrake, a Conservative MP, said “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.

The Federation of Small Businesses called the figures “really disappointing” and said that those involved should “work full tilt” to improve the service.

 

 

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