Watchdog ponders rule changes for SMEs following scandals
Currently, only individual consumers and around 5.5 million “micro-enterprises” can access the Ombudsman.
Britain’s financial watchdog is considering allowing small businesses to complain to the Financial Ombudsman following well-publicised scandals involving Royal Bank of Scotland and Lloyds.
Currently, only individual consumers and around 5.5 million “micro-enterprises” can access the Ombudsman if they have a dispute with a financial services firm.
Businesses that cannot access the Ombudsman need to take the firm to court, which many struggle to do.
But the Financial Conduct Authority (FCA) said on Monday that following a review, it is launching a consultation proposing that 160,000 additional SMEs, charities and trusts be able to refer complaints to the Ombudsman.
This would be done by changing the eligibility criteria so businesses with fewer than 50 employees, annual turnover below £6.5 million and gross assets below £5 million would become eligible.
FCA boss Andrew Bailey said: “Our evidence suggests some small businesses currently find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them.
“We have considered what could be done within our powers and the remit of the Financial Ombudsman Service to improve this situation and are proposing to expand access to the Ombudsman.”
The move follows revelations that staff at RBS’s controversial Global Restructuring Group were encouraged to extract money from struggling small businesses and in some cases forced them to collapse.
Lloyds also had to set aside £100 million for victims of fraud at the hands of HBOS Reading staff between 2003 and 2007.
Corrupt financiers from the branch were jailed last year for the £245 million loans scam which destroyed several businesses, before they squandered the profits on high-end prostitutes and luxury holidays.