UK Finance, an industry trade association, is launching an independent investigation into the way the market’s banks treat small businesses (SMBs), according to Reuters reports on Thursday (March 29).
The group appointed Simon Walker to lead the review, which will specifically look at the way banks handle complaints filed by small business borrowers. Reports said Walker and his team will probe how banks handle disputes with SMBs that are too small to go to court but remain unresolved.
“All banks have robust complaint arrangements which attempt to put things right quickly, apologize and, if appropriate, offer some compensation for costs incurred and payment in recognition of distress and inconvenience,” said UK Finance in a statement. “However, in some cases, complaints go unresolved to the satisfaction of the customer or cannot be dealt with by this internal procedure.”
Reports said the group aims to develop alternative solutions to dispute resolution and to address the needs of both banks and small businesses when mitigating.
The launch of the review comes as several high-profile scandals involving small business banking continue to play out. One of the largest is RBS, which regulators found to have mistreated small business customers by forcing some into bankruptcy via its Global Restructuring Unit.
The U.K. Treasury Select Committee published its full report on the RBS case, with the committee’s Chair Nicky Morgan telling Reuters last month that RBS’ actions uncovered by the probe “are disgraceful.”
U.K. officials are also working to address the ongoing issue of late payments to small businesses. Earlier this month, U.K. Chancellor Philip Hammond received recommendations by the Federation of Small Businesses to address the problem. The FSB’s own research found 84 percent of small businesses in the U.K. have been paid late, leading to regulatory action and an effort to boost SMBs’ access to financing in order to cope with cash flow stressors.