UK Government Backs Banks' Plan to Resolve Small-Business Complaints
November 30 2018 - 11:30AM
Dow Jones News
By Adam Clark
The U.K. government has welcomed plans by British banks for a
new system to resolve disputes with small businesses, suggesting
lenders will escape increased regulation.
U.K. Finance, a trade body for the banking industry, said Friday
that lenders would fund a specialist ombudsman for larger and more
complex cases that aren't covered by existing dispute services. The
ombudsman will be able to impose penalties of up to 600,000 pounds
($767,792) without the possibility of appeal.
The plan was backed by seven banking providers to small- and
medium-sized enterprises (SMEs) in the U.K., including FTSE 100
members Barclays PLC (BARC.LN), Royal Bank of Scotland Group PLC
(RBS.LN) and Lloyds Banking Group PLC (LLOY.LN).
John Glen, the British minister responsible for the
financial-services sector, welcomed the proposal.
"I've been clear with the banks that they needed to do more to
regain the trust of SMEs, so I'm pleased the industry has committed
to set up a fast, free & fair dispute-resolution scheme for
SMEs who aren't happy with their financial services. It's the right
thing to do."
Mr. Glen's approval may signal the end to the possibility of the
U.K. government legislating to create a tribunal to settle SME
banking disputes. A parliamentary inquiry is currently considering
the case for a tribunal.
Calls for greater protection for small businesses have
intensified in Britain in the wake of scandals over corporate
lending. RBS put aside GBP400 million pounds for compensation over
a controversial restructuring unit accused of squeezing small
businesses for cash. Lloyds made a GBP100-million provision to
compensate business clients who fell victim to fraud at a Halifax
Bank of Scotland unit.
U.K. Finance said the banks had also committed to a service to
resolve historic disputes dating back to 2008 and an independent
SME advisory council.
Write to Adam Clark at adam.clark@dowjones.com;
@AdamDowJones
(END) Dow Jones Newswires
November 30, 2018 11:15 ET (16:15 GMT)
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