In a recent survey by the Institute of Directors, 7 out of 10 members have expressed their strong and explicit support for our proposals for a Financial Services Tribunal to provide a mechanism for business owners to access justice when in a dispute with their financial service providers. These business leaders have also made it clear that they do not have confidence in the current UK Finance proposals, with less than 30% believing that the banking industry’s plans for an ombudsman will provide businesses with adequate access to redress in the event of a dispute with a lender.
Kevin Hollinrake MP, Co-Chair of the APPG on Fair Business Banking, said: “Business leaders have made it perfectly clear that they do not have confidence in the reformed dispute resolution landscape and urgently require a tribunal to protect them from future business banking abuses.”
The APPG has always supported the expanded remit of the Financial Ombudsman Service (FOS) and a new Voluntary Ombudsman Service (VOS), but these are not sufficient on their own. A full judicial tribunal must be part of the solution for those businesses that will remain outside the formal remit of either ombudsman or those that cannot afford to take a case against a lender to court. Our evidence shows that businesses with a turnover of £10m and above are not in a realistic position to challenge a multi-national financial institution in court and they must therefore be given an additional mechanism to access justice.
The support for a Financial Services Tribunal shown by business leaders is yet another strong voice to add to the broad support from a number of stakeholders including the FCA, the Treasury Select Committee, the Small Business Commissioner, TSB Bank, Metro Bank, Triodos Bank and the Finance and Leasing Association, which itself includes membership of the major banks.
The survey reinforces concerns that businesses have over the ability of any ombudsman system to adequately settle disputes given the inability of ombudsman to compel witnesses, force the disclosure of information, or deal with insolvent businesses. In addition, a future VOS will also have a compensation limit of £600,000, which will be too low for many businesses with substantially larger claims. If the VOS awards an amount above this limit, and a financial institution rejects the award, then businesses will still be left with the courts as their only option of appeal.