New UK bank dispute service too limited, say lawmakers

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By Iain Withers and Huw Jones

LONDON (Reuters) – Lawmakers have criticized Britain's big banks for pursuing plans to create a new complaint-handling service for small businesses that lenders have hurt, which they say is too soft.

UK Finance, London's commercial agency, is setting up and funding this new service, capable of resolving disputes and paying premiums of up to £ 600,000.

This initiative follows a decade of campaigning by small businesses who complained of being abused by their banks following the 2008 financial crisis.

The banks' proposal got the support of the British government, according to a correspondence between the UK Finance Ministry and lawmakers released Friday.

Two groups of British parliamentarians, however, criticized these proposals, saying that they would still exclude hundreds of companies from access to affordable justice.

Kevin Hollinrake, Chair of the All-Party Parliamentary Group on Fair Trade Banks, said his group had been offered a seat on the steering committee of the new complaints department, but that he was considering denying it unless that his concerns are taken into account.

"It is extremely important to give businesses access to affordable justice and we are far from that," Hollinrake told Reuters.

"It's nice to be invited, but unless these points are addressed, it's a thank you, but no thank you."

Hollinrake also criticized the allocation limits and eligibility criteria proposed by the new dispute settlement body, saying it should have independent governance, such as that of the Chartered Institute of Arbitrators.

The financial mediation service is currently handling small complaints, but activists and a number of senior lawmakers are favoring the creation of a new court system for disputes outside the limited mandate. mediator, with greater powers to sanction and compel lenders to provide evidence.

But the government has shown little appetite for supporting the legislation needed to put such a system in place and instead has supported UK funding plans.

Nicky Morgan, chairman of the Treasury's restricted committee, said: "There is multi-stakeholder support to strengthen protections and improve the access of SMEs to justice, so it is disappointing that the government is not acting on our recommendations. . "

The government rejected the Treasury Board's call for the creation of a court to handle complex complaints of banking customers.

The government said the powers of the existing mediator had already been expanded from April to allow an additional 210,000 SMEs whose turnover reached 6.5 million pounds to access it. free service.

The government supported the Financial Conduct Authority's plan to increase the Ombudsman's compensation limit to 150,000 to 350,000 pounds.

"The government is of the opinion that companies with sales in excess of £ 10 million can reasonably be expected to sue," the government said.

UK Finance's new dispute resolution body is aimed at companies with turnover between £ 6.5 million and £ 10 million.

(Reported by Iain Withers and Huw Jones, Edited by Jane Merriman)