AN influential group of MPs is campaigning for the rapid creation of a tribunal to provide justice for the owners of small and medium-sized enterprises (SMEs) who believe they have been mistreated by the banks.
The All Party Parliamentary Group on Fair Business Banking (APPG) has called for a debate at the Back Bench Business Committee to address concerns about a “systemic failure” to protect businesses, which it said has resulted in financial scandals costing tens of billions of pounds.
Earlier this week, the head of Britain’s financial watchdog revealed that he had told Royal Bank of Scotland to speed up its handling of compensation claims related to its treatment of struggling businesses during the financial crisis.
Andrew Bailey, chief executive of Britain’s Financial Conduct Authority (FCA), told a parliamentary committee that he had asked RBS CEO Ross McEwan “to get his act together” on claims processing. In a summary issued last week, the FCA said it had pinpointed “significant concerns” about how small business customers within the RBS Global Restructuring Group (GRG) were treated by the bank.
It said RBS had failed to support firms in a manner consistent with good turnaround practice; had placed an undue focus on pricing increases and debt reduction without considering the long-term viability of customers and had failed to identify customer complaints and handle those complaints fairly.
RBS has set aside £400m to tackle complaints and compensation. In a letter to the Treasury Select Committee, Mr McEwan said “we deeply regret the mistakes we have made in the past” regarding some GRG customers.
“We fully accept that we did not, in all cases, fully comply with our own policies or always meet the standards of service that we set ourselves,” the letter said.
Committee chair Nicky Morgan emphasised the toll on many GRG customers who had lost their business, their homes and suffered mental health issues and family breakdown.
The APPG welcomed Mr Bailey’s announcement in front of the committee that a consultation process about access to dispute resolution and redress for businesses will be launched.
Norman Lamb MP, the vice-chairman of the APPG, said: “This consultation is long overdue but welcome. It is vital that small businesses have a fair and independent means of seeking redress. If such a system was established it would have a positive impact on the culture of the banking sector.
“No longer would banks believe that they could act with impunity, with no consequences. It would provide a deterrent effect which is much needed.
“Happily there is a growing recognition among legislators and regulators that such a change must come.
“Our focus now must be on ensuring that the system set up is robust, inquisitorial and has the necessary teeth to deal with complex financial disputes.”
In its pitch for a debate before the Back Bench Business Committee, the APPG calls on the House to note wider allegations of malpractice in financial services and related industries.
The APPG believes the solution requires the collective and collaborative efforts of regulators, Parliament and Government.
The group calls for an “independent inquiry into practices in respect of the treatment of SMEs and the protections afforded them, and the rapid establishment of a tribunal system to effectively deal with financial disputes for businesses”.
The APPG is a cross party interest group, made up of MPs and peers.