The U.K. government is broadening the ability of small businesses (SMBs) to lodge complaints against their banks, according to Financial Times reports Tuesday (Oct. 16).
The Financial Conduct Authority (FCA) will allow small businesses to file complaints and secure compensation with the Financial Ombudsman Service (FOS) beginning in April, following a string of scandals highlighting bank misconduct against SMBs. The move raises the threshold at which a business can use the complaint service.
Companies with annual turnover below $8.57 million and with fewer than 50 employees, or companies with an annual balance sheet below $6.59 million, will be allowed to file complaints using the FOS, reports said. Previously, the complaint service was only open to sole traders and microbusinesses.
“The changes we are making are as far as we think we should go within our powers, but they will provide access to the ombudsman service for a significant number of smaller businesses,” said FCA Chief Executive Officer Andrew Bailey in a statement.
According to the publication, while small business advocates are applauding the move, some argue that the government should do more to protect small businesses.
“It is now up to the government to step up to the plate by introducing a tribunal that ensures that a holistic solution is found, [one which] provides access to justice for businesses in the U.K.,” said Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking.
SME Alliance Director Nikki Turner said in response to the FCA’s decision, “I don’t think the ombudsman service has the skills to deal with these complex products. The bank schemes leave the bank as judge, jury and executioner. They make you an offer, and if you don’t like it, you can sue. But [SMBs] can’t afford to sue.”
She proposed further increasing the cap on compensation to $1.32 million, but opponents said such a move may limit small businesses’ ability to find affordable, professional indemnity insurance.
Earlier this month, the Royal Bank of Scotland (RBS), one bank involved in a small business misconduct scandal, noted that a lack of sufficient regulation allowed the bank to avoid punishment after regulators found that it unfairly treated small businesses in its Global Restructuring Group. At the time, the FCA said it had “very limited” powers to issue a punishment against RBS.