Compensation scheme ‘not fit for purpose’ after resolving just 127 cases in nearly two years
New data from a banking dispute resolution service shows that fewer than 100 cases have received compensation in nearly two years of operation.
According to a quarterly update from the Business Banking Resolution Service (BBRS) released last week, just 99 customers have received financial awards or settlements since the scheme went live in February 2021.
The BBRS was designed to resolve historic and contemporary complaints involving small businesses and banks. In total 129 cases have been resolved, with 29 claims not being upheld. One customer had their case upheld but did not receive compensation.
Across the cases, the BBRS has paid out “substantially more than £1m” in redress to SME customers, although it declined to confirm exactly how much it paid out.
When policymakers first discussed a dispute resolution service, figures from UK Finance suggested that around 60,000 cases would be eligible for the historic scheme. The BBRS now estimates that there are around 1,600 eligible cases, although not all would apply.
Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), said “the BBRS’s own figures demonstrate that it’s not exactly been effective at helping SMEs resolve disputes with their banks”.
McKenzie argued the eligibility criteria are “far too narrow,” meaning very few firms are able to access the service.
William Wragg, chair of the Fair Business Banking APPG, told City A.M.: “60,000 predicted eligible cases. Just 129 resolved in two years. The numbers point toward a service that is simply not fit for purpose: slow, expensive and woefully lacking in the trust needed to restore confidence to the UK’s business community.”
Both Wragg and McKenzie argued that the government needed to establish a tribunal system to help deal with cases involving SMEs and banks.
Chair of the Treasury Committee, Harriett Baldwin, said: “The Committee will be looking closely at the impact of the Business Banking Resolution Service as part of our inquiry into whether small businesses are receiving the right level of support to prosper in the UK.”
“Since its launch, the BBRS has helped many SMEs to tackle a range of highly complex business banking complaints. BBRS interventions have had a transformational impact for multiple SME owners,” a BBRS spokesperson said.
“It is important to recognise that beyond the 99 customers to have received a financial award or settlement the BBRS has also resolved cases to the satisfaction of the customer and the bank in instances where no award was made,” they continued.