Small and medium-sized businesses are the lifeblood of the British economy. Yet too many of them are failing to scale up - because they are reluctant to take on the borrowing that they need.
A new report from Kevin Hollinrake, MP for Thirsk and Malton, argues that this derives in part from a lack of trust in the big banks, following a series of scandals which have seen SMEs badly treated - or in some cases driven out of business.
The report, ‘Fair Business Banking for All’, is written in Hollinrake’s capacity as Co-Chair of the All-Party Parliamentary Group on Fair Business Banking, which provided support towards the work. It is published by the Centre for Policy Studies.
The report identifies a series of flaws in the current regime by which SMEs can gain access to justice, with a significant gap between the claims that can be dealt with by the Financial Ombudsman Service and those which need to can be settled in court. Most business people are simply not in a position to be able to afford or raise the huge sums it requires to sue a bank.
The report makes a series of recommendations, including that SMEs should get the same protections as ‘private persons’ under Section 138D of the Financial Services and Markets Act 2000 and that a new Financial Services Tribunal should be established for the simple, low-cost resolution of financial disputes
Lord Dyson, one of the country’s most senior judges, said he could “unreservedly commend this report”.
The former Master of the Rolls and Head of Civil Justice said it would enable SMEs “to use financial services in the knowledge that unresolved complaints could be determined affordably by an independent expert tribunal”.
Kevin Hollinrake said: “Enterprise and entrepreneurship are the lifeblood of the British economy. To prosper further, we need banks and business to maintain a healthy, supportive relationship and to have confidence that when disputes arise, they are dealt with fairly, efficiently and effectively.”