Two-thirds of SMEs would be willing to challenge their bank in the courts if they fail to deal with complaints properly, a survey of businesses during the coronavirus crisis has found.
The Business Banking Resolution Service (BBRS), which carried out the research, said it was “critical” that companies understood that they would have to pay back their government-backed Covid-19 loans.
The BBRS is a new independent service funded by the banking industry set up to resolve disputes between eligible SMEs and participating banks.
Seven banks are currently signed up to it ahead of launch later this year: Barclays, Clydesdale Bank (including Yorkshire Bank and Virgin Money), Danske Bank, HSBC, Lloyds Banking Group, RBS Group, and Santander.
The survey found that more than half (56%) of its sample of 500 UK SMEs had taken out a loan as part of a government support scheme.
Meanwhile, almost a third (29%) said they had experienced behaviour from their banks this year that would give them “cause to lodge a complaint”, while 32% said they had complained about their bank in the past.
Although three-quarters of SMEs trusted their bank to handle any complaint they might make ‘transparently and fairly’, a two-thirds majority were also willing to challenge their bank in the courts if necessary, with 21% describing themselves as “completely willing” and 45% “somewhat willing”.
The main factor putting off SMEs from doing this was the ‘associated costs’, a reason given by 50%. The other main factors were the risk of losing (31%), time commitment (27%), and emotional impact (22%).
Of those who had taken out government-backed loans, 43% said “they did not expect to repay them”, either because they do not think they will be able to, or because they do not think the government would pursue the debt.
The BBRS said in most cases, this would be a job for the bank not the government.
Lewis Shand Smith, chairman of the BBRS, said: “Government-backed loan schemes have provided a lifeline.
“But it is critical for customers to understand that, just like any other loan, they will be required to repay 100% of the money they borrow under these new schemes.
“There needs to be clarity about that now to avoid the risk of storing up problems for the future. The banks have been working hard to support many of their SME customers in this context. The BBRS will not have access to a ‘magic wand’ to wish away unpaid loans.”
Mr Shand-Smith said the results of the survey showed that “while they have played a crucial role in saving many businesses and livelihoods, the aid schemes have the potential to create a wave of post-crisis disputes”.
In a consultation launched earlier this month  ahead of finalising how it will work, the BBRS said it would deploy “a range of alternative dispute resolution [ADR] services”, including mediation, conciliation and “investigative adjudication”, a technique “most commonly associated with ombudsman schemes”.
Consultees were asked what they thought were the advantages and disadvantages of ADR, and, if they had “greater awareness” of ADR, whether they would see it as a better option than litigation.
The BBRS will accept historical complaints that were not eligible for the Financial Ombudsman Service (FOS) until it changed its criteria on 1 April 2019, meaning complaints from SMEs that between 1 December 2001 and 31 March 2019 had a maximum turnover up to £6.5m per annum and total assets of up to £5m.
FOS’s new limits are SMEs with an annual turnover of less than £6.5m and a balance sheet total of less than £5m, or that employ fewer than 50 employees.
SMEs above these levels but with annual turnover of up to £10m and total assets up to £7m can also turn to the BBRS.
Alexandra Marks, a former partner at Linklaters, was appointed chief adjudicator of the BBRS  at the end of last year. Samantha Barrass, a former executive director of the Solicitors Regulation Authority, was appointed chief executive.