City watchdog tells banks to treat small businesses ‘fairly’ during cost-of-living crunch
The UK’s financial watchdog has told Britain’s top banks to improve their treatment of struggling small business owners when collecting and recovering debts.
The UK’s Financial Conduct Authority (FCA) said Britain’s banks should take action to ensure fair treatment of small and medium enterprise (SME) customers, after the watchdog uncovered repeated instances of failures during a review.
The regulator said it had unveiled instances of lenders imposing unaffordable payments plans on their customers, as it warned that bank staff lack the proper training to ensure fair treatment of SMEs.
In a letter to the banks, the FCA said its warning comes in response to the “rapidly changing circumstances” currently facing the world, as a result of “recent global events”.
The watchdog warned that small businesses across the country will be affected by the UK’s cost-of-living crisis and rising living costs, as the body said it remains “committed to the fair treatment of SMEs” in light of “historic issues” in the banking sectors’ treatment of small businesses in the past.
Sheldon Mills, the FCA’s Executive Director for Consumers and Competition, said: “People across the country will be affected by the rising cost of living – and this includes small businesses.”
“We were disappointed to find repeated instances of these customers not being treated fairly by banks when they’re struggling. We expect the whole sector to act quickly to improve this. We will take action if problems continue.”
In seeking to ensure fair treatment of SMEs during the cost-of-living crisis, the FCA called on banks to put clear procedures and policies in place to prevent mistreatment.
The watchdog said banks should also keep accurate records of its decision making processes, with a view to using those records to ensure standards are being met.