A member of the British Parliament is calling for the establishment of a new SME banks disputes tribunal to oversee disagreements between small businesses and banks.
Kevin Hollinrake is MP for Thirsk and Malton and Vice-Chair of the All Party Parliamentary Group for Fair Business Banking and he is concerned that SMEs don’t legally challenge banks because they can’t afford to take on such big firms. A bank funded tribunal would help SMEs litigate against banks in the case of misselling or poor advice.
Hollinrake argues that there must be a level playing field between small and medium sized businesses and the banks. If businesses are mistreated by their banks, it can cost millions to take them to court and few firms have such resources.
He says: “We absolutely can’t have a situation when businesses won’t borrow because they are afraid of the risks.
The UK is the leading nation within the EU for ‘start-ups’ but one of the worst for ‘scale-ups’, partly because some businesses have become too afraid to seek the finance they need. What we need is a Financial Services Tribunal that can tackle complex cases. The banks would fund it so it would be much cheaper for the claimant to bring an action and they would not have to pay the banks’ legal costs if they lost. As a result, lending would increase as confidence between banks and business returns.”
The success of an SME banks disputes tribunal would entirely depend on its powers. Unless it has the power to sanction a bank when it has ill served a small business, it would be pointless. What powers would you like such a body to have?
