A member of parliament has called for the establishment of a SME banking disputes tribunal to oversee disagreements between small business owners and their lenders.
Kevin Hollinrake, the Conservative MP for Thirsk and Malton and vice chair of the All Party Parliamentary Group for Fair Business Banking, has said that the disputes tribunal would help smaller firms take legal action against banks for miss selling products or offering poor advice.
In a statement, the MP voiced his concerns that too many small businesses are unable to take legal action against banks because they can’t afford to challenge them in the courts. He urged the government to take steps to level the playing field between small companies and large banks.
Explaining how the tribunal would work, Hollinrake said: “The banks would fund it so it would be much cheaper for the claimant to bring an action and they would not have to pay the banks’ legal costs if they lost. As a result, lending would increase as confidence between banks and business returns.”
His call follows industry scandals like that at RBS last year, where a regulator’s report revealed that the high street lender had deliberately and systematically mistreated small business customers.
Last month, The Financial Conduct Authority found that RBS bosses had instructed staff at the bank’s Global Restructuring Group – a body set up to compensate business banking customers who’d previously been miss sold products – to target “basket cases” and to “let customers hang themselves”.
Hollinrake went on to say: “We need a financial services tribunal that can tackle complex cases. We absolutely can’t have a situation when businesses won’t borrow because they are afraid of the risks.
“The UK is the leading nation within the EU for startups but one of the worst for scale-ups, partly because some businesses have become too afraid to seek the finance they need.”
What powers would you like to see given to a small business banking disputes tribunal? Get in touch and tell us.
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