Commons Sense

House of Commons · Westminster Hall

Business Banking Resolution Service — [Mark Pritchard in the Chair]

11 July 2023 · 6 other contributors · 5,944 words

Opened by William Wragg Con Hazel Grove

Responding minister: Andrew Griffith

Business & Trade

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

William Wragg raised concerns about business banking resolution service — [mark pritchard in the chair] in Westminster Hall. A government minister responded.

Key points

  • The Business Banking Resolution Service (BBRS) has resolved only 28 cases out of an estimated potential of over 60,000 complaints since its launch.
  • A financial services tribunal is proposed to provide meaningful redress for SMEs in a fair and independent manner.
  • Amending section 138D of the Financial Services and Markets Act 2000 is suggested to enhance legal rights for SMEs.

Key requests to Government

The proposal for a financial services tribunal must be seriously considered. Such a body would provide meaningful redress in a fair and independent way, similar to employment tribunals. The creation of this tribunal should also involve amending section 138D of the Financial Services and Markets Act 2000 to enhance legal rights for SMEs.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

William Wragg Con Hazel Grove

The Business Banking Resolution Service (BBRS) has failed to restore trust between small and medium-sized enterprises (SMEs) and their lenders. According to a report by the all-party parliamentary group on fair business banking, 73% of SMEs would rather grow more slowly than borrow due to lack of confidence in borrowing. The BBRS was established to resolve disputes but has resolved only 28 cases out of an estimated potential of over 60,000 complaints, with financial awards amounting to between £1 million and £2 million since its launch at a setup cost of more than £40 million.

Other contributors (6)
  • Andy McDonald Lab Middlesbrough and Thornaby East

    A constituent was encouraged to take on riskier loans by Lloyds Bank and then foreclosed upon, ruining his life. This example highlights the failure of the current system. Mr McDonald questioned whether legacy cases fit the criteria set out by the hon. Member for Hazel Grove, expressing concern that many constituents might not meet these criteria but still need resolution.

  • George Eustice

    Asked whether business lending should follow residential mortgage rules requiring court orders before banks can enforce security without recourse to the courts at all.

  • Kirsten Oswald SNP Dumfries and Galloway

    The current system is described as a shambles with shattered trust by constituents who have shown huge amounts of patience, courage, and grit. She advocates for an independent tribunal service. Ms Oswald agreed with her right hon. Friend's speech and highlighted the imbalance in power between banks and those seeking redress, stressing that new arrangements must be fair, independent, and transparent. Asked the Minister to extend meeting offer to others with long-standing unresolved cases in this field.

  • Margaret Ferrier SNP Rutherglen and East Kilbride

    Support for the BBRS is limited, and a new alternative resolution scheme should be created without burdening the tribunal system. She suggests that mediation services should be required first. The BBRS has not resolved a meaningful number of complaints. She noted that the former Chancellor expected discussions on the scope and eligibility if the scheme was not successful, which is now evident. Ms Ferrier asked if the Business Banking Resolution Service was difficult to use or poorly publicised given that only 776 businesses had registered by March last year, challenging the accessibility of the service.

  • Stewart Hosie SNP Dundee East

    Mr Hosie expressed concern over the limited success of the BBRS, noting that only a few dozen out of potentially 60,000 legacy cases have been resolved. He highlighted issues with narrow eligibility criteria and the unilateral decision to dissolve the SME liaison panel by the BBRS executive. Mr Hosie also pointed out negative headlines about the service's effectiveness and questioned whether lessons from past banking scandals had been applied. Requested a guarantee that there will be no gap period between the removal of BBRS and any decision on new thresholds or bodies, ensuring businesses do not fall into a resolution black hole.

  • Tulip Siddiq Lab Hampstead and Highgate

    Small and medium-sized businesses are the lifeblood of our economy and deserve fair dispute resolution with lenders. The BBRS, while designed to help, has faced issues like low case numbers, only 28 cases have led to financial awards as of June 2023. There are concerns about transparency and accountability, questioning if a statutory body is needed for better service.

Government Response

Andrew Griffith

It is a pleasure to serve with you in the Chair, Mr Pritchard. I congratulate my hon. Friend the Member for Hazel Grove on securing the debate. The Business Banking Resolution Service (BBRS), an independent body, was established following parliamentary interventions but has faced criticism. While it is not directly part of Government or the Treasury, the BBRS's effectiveness and the number of cases it handles are critical factors. The Minister emphasised the importance of a quick, efficient, and unbiased dispute resolution process for businesses facing issues with their banks. He committed to meeting Members like William Wragg to discuss specific constituent experiences but advised against raising false expectations due to ongoing processes and consultations regarding financial regulatory reforms. The Financial Conduct Authority is consulting on extending the upper threshold of complaints dealt by the Financial Ombudsman Service from £6.5 million, and the Minister encouraged awaiting their response before considering further statutory interventions. He stressed that while it is important to address the cracks in the compensation regime, any new regulations must not hinder small businesses' access to capital or exacerbate unintended consequences.

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