Tuesday 16 January 2018
Following a series of three widely-read articles by Richard Samuel, a barrister at 3 Hare Court, in Capital Markets Law Journal (CMLJ), Parliament will be debating the proposals made by Samuel for a Financial Services Tribunal on 18 January.
Today (16 January) sees the publication of the third and final article of a series of three in CMLJ, of which the first two have attracted about 2,500 downloads and 1000 related blog page views so far.
The series has inspired an inquiry in Parliament run by a cross-bench grouping and which includes Lord Dyson, the ex-Master of the Rolls. It is the All Party Parliamentary Group (APPG) on Fair Business Banking. Its work has won support from the small and medium sized enterprise (SME) community, which is looking for fairer means of redress than the Financial Ombudsman Service (FOS) offers for mis-selling of complex financial products by banks.
In his most recent article Samuel appeals directly to the banks to support a specialist, quick and inexpensive financial services tribunal to resolve substantial disputes between banks and their customers, modelled on the Employment Tribunals. Those tribunals moved employment culture on from common law notions of ‘master and servant’ – still the language of labour markets in the 1960s – to the fairer culture we know today. For instance, they were the first forum where women could bring sex discrimination claims. Samuel argues that Financial Services Tribunals would have the same positive effect on banking culture.
This is a news story for two reasons. First, it takes the argument over an important new threshold: why a tribunal would benefit banks. Samuel points to two successes in the banking’s past where the industry offered customers favourable means of resolving disputes to stimulate its own growth: direct debits and credit cards. If today’s industry offered SMEs trusted, affordable dispute resolution through a specialist tribunal, it would be able to grow SME lending, particularly in international markets unused to the expense of English common law courts. Definitive rulings of the tribunal on the meaning of regulations would also reduce banks’ ever-increasing cost of compliance and remove that barrier to innovation of new financial products.
The second reason is the FCA’s position. At first, in 2017, it backed a Financial Services Tribunal before the Treasury Select Committee and in the press. Since then, it has decided a tribunal is out of reach. It is about to consult on expending the Financial Ombudsman Service (FOS). That is not what the APPG wants and it is not what SMEs want. FOS resolves disputes in private so it cannot move culture. Samuel argues it is not what the industry should want because it will not provide new opportunities for growth.
Lord Cromwell, Co-Chair of the APPG on Fair Business Banking, says:
'The Inquiry that the APPG has been conducting has identified clearly that banks and business customers urgently need a specialist, quick and inexpensive tribunal to settle disputes. The current option - court proceedings - is a slow and hugely expensive route that only the largest businesses can even contemplate.
At the APPG’s instigation, on 18 January 2018 the Commons will debate this issue for the second time. [Samuel's latest] article demonstrates why a tribunal makes sense for banks as well as their customers; and thereby brings new insight to that debate.'
A two-page Q&A explaining the proposal is available here.
The first two articles in the series written by Richard Samuel can be found here and here. The third article will be published today via the OUP.
Contact for the Media
For further information about this press release, please contact Alice Heathfield at 3 Hare Court- firstname.lastname@example.org or on 02074157829.