In business banking news, the U.K.’s Financial Conduct Authority (FCA) plans to propose an extension of its jurisdiction from serving individuals and micro-businesses to also include small and medium-sized businesses (SMBs). The proposal comes in the wake of multiple small business banking scandals, reports in the Financial Times said Wednesday (Nov. 1).
Andrew Bailey, chief executive officer of the FCA, spoke to parliament this week and said the Authority would submit plans to broaden the reach of the Financial Ombudsman Service, through which complaints regarding financial services (FinServ) can be made, to include SMBs. This would ensure small businesses affected by banking scandals — such as the Lloyds and Royal Bank of Scotland (RBS) incidents and other scandals impacting financial institution (FI) — are compensated appropriately. According to Bailey, the proposal is in response to the FIs’ recent decision to set up voluntary compensation programs.
“I would much prefer that this process is not done on a voluntary basis,” Bailey told the Treasury select committee, according to the Financial Times article. “It’s not sensible that each time something happens we have to set something new up. It’s much better to have a standardized system.”
But, implementing a “standardized system” for FinServ concerns like these is easier said than done. Reports noted Bailey had acknowledged that instituting such a system would require legislation, and he was not “hopeful” that parliament would take this initiative on, the publication wrote.
Another parliamentary committee, the All-Parliamentary Group on Fair Business Banking, has reportedly backed the FCA standardized system initiative for FinServ and called for a probe into the treatment of small businesses by banks. That committee also proposed the creation of an independent tribunal to adjudicate any disputes between SMBs and financial institutions, the Financial Times reported.