On 23 October 2018, UK Finance published a review into the complaints and alternative dispute resolution (ADR) landscape for the UK’s small and medium enterprises (SME) market. The report serves three purposes to:
- recommend ways in which banks and SMEs can resolve future grievances and complaints;
- help ensure that the excesses of the global financial crisis cannot be repeated and that record-keeping and data flows about 6 SMEs be used to monitor bank behaviour and culture and provide an early warning system of customer mistreatment; and
- suggest a method of closure which might be acceptable to the individuals and their families who suffered because of poor SME-related banking practice following the financial crisis.
Drawing on the findings of an investigation into SME / bank dispute resolution (found on page 65 of the report), the report makes recommendations which can be summarised as follows:
- a new division within the Financial Ombudsman Service (FOS) tasked with resolving SME-bank disputes, and a new expert advisory body to advise the FOS on legal and banking issues;
- a voluntary ombudsman scheme to support larger businesses that are not ‘eligible complainants’ to the FOS, as well as a separate voluntary scheme to consider legacy SME-bank disputes that arose following the financial crisis and have not been eligible for other forms of dispute resolution;
- real time data links between the bank ombudsman facilities, the FCA and key government departments to provide an early warning system against future malpractice; and
- a formal process that seeks to achieve reconciliation and closure where banks meet a representative sample of affected SMEs, listen to and acknowledge the loss experienced by those businesses and commit to a new system of dispute resolution and other measures to ensure past issues do not infect their future relationship.