A service that allows sole traders and micro businesses to complain about bad banking practices should be extended to include more small businesses according to Britain’s finance regulator.
Currently only individuals or ‘micro’ firms with less than 10 staff can complain to the Financial Ombudsman Service.
However, the Financial Conduct Authority (FCA) has released a consultation paper in which it says that it wants to extend the service to businesses with annual turnover below £6.5m and less than 50 staff.
Andrew Bailey, Chief Executive at the FCA, said:
‘It is important for everyone, including financial services firms, that there is an effective dispute resolution mechanism for businesses. Our evidence suggests some small businesses currently find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them. We have considered what could be done within our powers and the remit of the Financial Ombudsman Service to improve this situation and are proposing to expand access to the Ombudsman.’
The proposed extension comes not long after an internal Royal Bank of Scotland memo was made public. In it managers were urged to let struggling business customers “hang themselves”. Now the bank has given the green light for full publication of the FCA inquiry into how its restructuring unit mistreated small businesses.
Speaking about the treatment of small business owners, Head of Businesscomparison.com, Philip Brennan said:
“The stress and strain on small business owners resulting from financial hardship can be immense, so this past treatment from an institution that should have been offering support to customers is shocking. Small businesses are at the very heart of our economy, they provide 60 per cent of all private sector employment in the UK and have a combined annual turnover of £1.9 trillion. Attitudes must change and lessons must be learned from this case so that our country’s entrepreneurs are never treated in this way again.”