11th January 2019
Treasury and FCA betraying British business says SME Alliance
SME Alliance, which supports business people in their disputes with banks, has accused HM Treasury (HMT) and the Financial Conduct Authority (FCA) of failing British business and caving into the big banks in their refusal to set up a fair, independent and transparent system for resolving disputes between SMEs and their lenders.
In their response to the Treasury Select Committee’s 24th Report on SME finance, both HMT and the FCA have refused to regulate SME lending, or set up the Tribunal system advocated by MPs, businesses and some banks. Instead they are allowing UK Finance, the banks’ own trade body, to set up an “independent” adjudication system. The Government and the regulator claim that there is not “a clear case for bringing SME lending into regulation, as there would be a number of direct and indirect costs” and also argue that “the financial services industry has changed significantly”.
Nikki Turner, director of SME Alliance, said: “The Government and the FCA are betraying British businesses, while acknowledging they are the backbone of this country, because they are unwilling to take on the big banks. Instead of putting in place regulation that would protect businesses and create a truly independent tribunal system to deal with disputes, they are allowing the big banks to run their own mechanism, which is on their terms, effectively letting the banks mark their own homework.
“This has created a farcical situation where SMEs become ‘too big to regulate’ because the banks are ‘too big to challenge’. Yet again business owners have been denied access to justice.
“The arguments used by FCA and HMT are flawed. They only need to look to Ireland to see a regulatory system that is working for SMEs without onerous extra costs. The idea that because the banks are not behaving as badly as they did a decade ago, it’s all OK, is like inviting Hannibal Lecter to dinner because he hasn’t killed anyone recently.”
Two of the leading challenger banks – Metro and TSB – have joined calls by the Treasury Select Committee, the All-Party Parliamentary Group on Fair Business Banking and SME Alliance for an independent tribunal to rule on disputes between SMEs and their banks.
Members of SME Alliance are currently battling many of the major UK banks for compensation, with high profile cases against Lloyds Banking Group and RBS leading to claims for hundreds of millions of pounds of recompense for unethical, oppressive and illegal behaviour.
SME Alliance was formed in September 2014 to support SMEs “battling against fraud, corruption and misconduct in the financial sector” and to lobby for the fair treatment of businesses by their banks and advisors.