Business leaders still need to be convinced enough is being done to protect small companies from mistreatment by banks, new figures from the Institute of Directors show today. Last November UK Finance and the Financial Conduct Authority announced measures to give firms with turnover up to £10m the ability to seek redress if they have a dispute with their lender. However, in a survey of over 700 businesses, less than a third thought the new systems would be adequate, with a majority unsure.
A further proposal from the Treasury Select Committee, to create a new Financial Services Tribunal, was backed by nearly 7 in 10 IoD members in the survey. The Government does not support a new tribunal.
Edwin Morgan, interim Director General of the Institute of Directors, said:
“While disputes between businesses and lenders remain the exception not the rule, it’s right for the banking industry to take active steps to address concerns, particularly in the wake of some horror stories. However, many business leaders are sceptical of the new measures, and will take some convincing. If small businesses do not find the new system provides significantly improved access to redress, the clamour for further action will grow.
“The Government thinks that a tribunal would be more costly and less flexible for small businesses, and there seems no prospect of it being created in the short term. Our members have to hope that the current approach, combined with meaningful efforts to promote competition in the business lending sector, will serve to help level the playing field. The proof of the pudding will be in the eating, and we will be watching closely to see whether businesses get the fair treatment they deserve.”