ADR service for larger SMEs in dispute with banks goes live

Marks: Solicitor is chief adjudicator

A free independent ADR service to help larger SMEs that cannot use the Financial Ombudsman Service to resolve disputes with banks went live yesterday.

Two years in the making, the Business Banking Resolution Service (BBRS) will use conciliation, mediation and ultimately adjudication to deal with unresolved complaints from these SMEs with seven participating banks, which make up the majority of the business banking market.

They are Barclays Bank, Danske Bank, HSBC, Lloyds Banking Group (Lloyds Bank and Bank of Scotland), NatWest Group (Royal Bank of Scotland, NatWest, Coutts and Ulster Bank), Santander, and Virgin Money (including Clydesdale Bank and Yorkshire Bank). It is hoped that more banks will join in future.

They are funding the service but it is independent of them.

The Financial Ombudsman deals with complaints by micro-enterprises and SMEs which have a turnover of less than £6.5m, a balance sheet total of less than £5m, or employs fewer than 50 people.

The BBRS is operating two schemes for those outside these criteria: a ‘contemporary’ scheme for cases from 1 April 2019 onwards and businesses with a turnover up to £10m per annum and total assets up to £7.5m; and a ‘historical’ scheme for incidents arising between 1 December 2001 and 31 March 2019 and for businesses with a turnover up to £6.5m per annum and total assets up to £5m.

Charities and trusts can also use the BBRS, subject to eligibility criteria.

The BBRS estimates that up to 6,000 cases will be registered over the next three years for the historical scheme.

Solicitor Alexandra Marks is the BBRS’s chief adjudicator, while Samantha Barrass – one-time executive director at the Solicitors Regulation Authority – is its chief executive.

The BBRS has engaged the Centre for Effective Dispute Resolution (CEDR) to provide flexible case-handling capacity to support the delivery of the service alongside the BBRS’ own in-house team.

Where the case is not mediated, if the customer accepts the BBRS’s decision, the bank will be legally bound by it.

The BBRS can make binding awards of up to £350,000 in historical cases and £600,000 in contemporary cases. The chief adjudicator may also recommend higher awards that are not binding, but there is an expectation that the banks will meet them.

The BBRS will also be able in certain circumstances to consider cases that are ineligible under its rules where the bank and customer collectively agree, meaning the service has a wider scope than originally anticipated.

The hope is that the BBRS will give SMEs added confidence to take out loans and other business banking products and services knowing that, if something goes wrong, they have a route to independent resolution.

The BBRS’s independent chair, Lewis Shand Smith, said: “By working with us voluntarily to develop this independent service, the participating banks and SME business groups have made an important contribution to supporting economic recovery among small businesses.

“By restoring trust, it will give businesses the confidence to borrow, leading to an improved climate for investment.”

The BBRS has the backing of the government, with small business minister Paul Scully it would play “a vital role in ensuring small business owners can access expert advice and have their voices heard”.

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