The co-chairman of a group of MPs has accused the banking industry’s trade body of fighting a rearguard action to keep its members insulated from the law.
Kevin Hollinrake MP has denounced the findings of an independent review commissioned by UK Finance because he claims the report does nothing to deal with the irresponsible banking culture that lay at the heart of the financial crisis.
However, a UK Finance spokesman said the review provided a valuable contribution to the debate about the best ways of ensuring SMEs (small and medium-sized enteprises) who have a complaint against the banks gain access to justice.
The review, chaired by former Institute of Directors Director General Simon Walker, said a new division within the Financial Ombudsman Service (FOS) could focus on disputes between banks and SMEs.
The All Party Parliamentary Group on Fair Business Banking, (APPG) which is co-chaired by Mr Hollinrake, has called for the establishment of a new tribunal to oversee complaints brought by SMEs against the banks.
However, Mr Walker’s review concluded that a new financial complaints tribunal for small businesses would be expensive and take years to set up. Revamping the FOS could be done by mid-2019 and offer a faster, cheaper service, Mr Walker told MPs.
The APPG said it could not accept that Mr Walker’s proposal would provide a level playing field between business and banks.
In a letter to Economic Secretary John Glen, Mr Hollinrake says: “We have to see the UK Finance report for what it is: a rearguard action by the banks’ trade body to keep its members insulated from the law.
“The status quo suits the banks very well. For years, they have acted as judge and jury on their own behaviour through redress schemes that even the Financial Conduct Authority (FCA) admits were woefully inadequate.
“Now we hear proposals for a further extension by the FOS to deal with cases of financial and legal complexity way beyond the bounds of what a consumer body can reasonably be expected to deal with.”
Mr Hollinrake’s letter continues: “It is one thing for a consumer to be content to run a PPI (payment protection insurance) complaint through the FOS ‘factory’.
“It is another to expect a business person whose livelihood is on the line to think it is acceptable..Disputes such as these is what tribunals are designed for.”
A spokesman for UK Finance said the review conducted by Mr Walker was independent. He had been selected by a panel that included a representative from the APPG, the spokesman said.
The spokesman added: “Simon Walker’s report provides a valuable contribution to the ongoing debate on how to ensure SMEs have the most appropriate access to dispute resolution options that are efficient and unbiased when they feel things have gone wrong in their relationship with their banks.
“As this review acknowledges, a number of important changes have been made in the industry, but clearly there is more that can – and should – be done. UK Finance will now study the recommendations closely and work with banks, business representatives, the government and regulators to look at how best to take these forward to ensure fairer outcomes are delivered for SMEs.”
The “diverse selection panel” that selected the review’s chairman also included representatives from the Federation of Small Businesses as well as the independent chair of the UK Finance SME Advisory Group, the spokesman said.
The Yorkshire Post understands that Mr Glen will respond to Mr Hollinrake’s letter in due course.