4th December 2018

Banking industry to fund new ADR scheme for larger SMEs

Small and medium size enterprises (SMEs) will soon be able to have their banking and finance disputes reviewed and redressed through alternative dispute resolution arrangements, following the creation of a specialist ombudsman service with the expertise and powers to address larger and more complex cases for eligible SMEs.

UK Finance has set out its response to the recommendations of Simon Walker’s independent Review (the Review) of alternative dispute resolution (ADR) for SMEs. These proposals have been developed with the agreement of the seven main SME banking providers. UK Finance and its members acknowledge there are valuable lessons to be learned from how the industry responded and are determined to improve the future handling of banking complaints for the vast majority of SMEs by delivering a series of proposals to deliver stronger and fairer outcomes for these customers.

These include an industry-wide commitment to forward looking dispute resolution for SMEs while supporting the extension of the Financial Ombudsman Service (FOS) to provide more SMEs with access to a simple and independent complaints review and redress mechanism.

In addition, the industry has committed to establishing an independent review process for unresolved legacy complaints brought forward by SMEs since 2008. This is alongside the creation of an independent SME advisory council with the ability to consider the treatment of SME customers and emerging issues and trends.

To deliver these new voluntary arrangements, the industry will establish an independent Implementation Steering Group to undertake further work to develop the scope, operation and funding of the scheme for eligible historic cases; and to develop and implement the voluntary ombudsman scheme refining the application, delivery and funding of a voluntary ombudsman scheme for SMEs with turnover of between £6.5m and £10m and a balance sheet up to £7.5m.

The Steering Group will be established and commence work in December 2018. It will be chaired by a suitably independent individual with the requisite skill and experience and supported by an independent secretariat. UK Finance and its members will seek to work with the Co-Chairs of the All-Party Parliamentary Group on Fair Business Banking and representatives from the British Chambers of Commerce and the Federation of Small Business, acting in consultation with HM Treasury, the FCA and the FOS as appropriate to select the Chair. The industry is aiming to implement these voluntary ombudsman arrangements by September 2019.

Commenting, Stephen Jones, UK Finance CEO, said: “SMEs are essential to the success of our economy. It’s therefore vital that lessons are learned from incidents of poor treatment of SMEs by the banking industry and that future redress schemes are fit for purpose. The Review made a number of important recommendations on how to do this, which the industry is committed to taking forward to deliver stronger and fairer outcomes for SME customers.”