A new alternative dispute mechanism has opened up with the aim of providing an alternative to the Financial Ombudsman Service, for those that don’t meet the eligibility requirements for FoS.
The service will look at, and deal with all manner of banking issues faced by small and medium sized partnerships and companies. It has begun to look at “pilot” test cases, with a view to rolling out the full service later this year.
Business Banking Resolution Service
From 1 April 2019 the size criteria for small businesses and partnerships that wanted to approach the Financial Ombudsman Service (FoS) for dispute resolution changed. It increased from the previous limits (fewer than 10 employees, turnover of less than €2million, balance sheet of less than €3.5 million) to one of fewer than 50 employees, annual turnover of less than £6.5 million and a balance sheet total of less than £5 million. At the same time, the maximum amount that FoS could award increased from £150,000 to £350,000.
Unfortunately, whilst this change permitted access to FoS for larger small businesses going forward, eligibility remains dependant upon the size of the complainant at the time that the damage or loss took place, and not at the time that the complaint was entered into FoS.
For example, a case that I took to FoS last year where the number of full time employees was deemed to have been above 10 (as the bank was extremely keen to point out and prove) cannot be grandfathered into the new eligibility criteria (of up to 50 employees) as at the time of the damage done by the bank’s product (2010) it had 10.5 employees.
However, there is encouraging news. In tandem with the higher FoS eligibility a new dispute resolution service has been set up called the Business Banking Resolution Service (BBRS). BBRS is open to adjudicate on banking disputes brought to it by small and medium sized businesses. The adjudication scheme is divided into two criteria in terms of size, that is an “historic scheme” covering the period 1 December 2001 to 31 March 2019 where the complainant had turnover of up to £6.5 million and total assets of up to £5 million, and a “current scheme” for 1 April 2019 onward where the complainant had turnover of up to £10 million and total assets of up to £7.5 million.
We now have three cases as test cases that did not meet the FoS criteria that can now go forward to BBRS. Our experience has always been that more complex disputes require careful guidance through the complaints process and intervention by advisers that know how to navigate the waters results in more successful outcomes.
The banks that have agreed to participate in the BBRS scheme include the following:
- Barclays
- Clydesdale Bank (including Yorkshire Bank and Virgin Money)
- Danske Bank
- HSBC
- Lloyds Banking Group (including Lloyds Bank and Bank of Scotland)
- RBS Group (including Royal Bank of Scotland, NatWest and Ulster Bank Northern Ireland)
- Santander UK plc
If you have a case therefore that has been impacted by a product sold by one of these banks that did not meet the criteria for FoS in the past, they can now put the dispute forward for consideration. We are here to help the case reach a successful resolution, and we have helped well over 100 customers gain redress over the past 8 years.
We continue to win significant cases against the banks on unfair fixed rate loans. In November we secured for a farmer from Pembrokeshire cash redress of around £70,000 in addition to a lowering of his loan balance by £30,000 and conversion to cheaper variable rates. This was against Nat West. The result is published on the Financial Ombudsman Service’s website. FoS opined that the bank “hid” the existence of break costs from the borrower.
We have also had a recent win against Lloyds Bank for a Welsh farmer. In cash terms, the farmer will receive about £230,000 back, plus the loan is now on a variable rate.
Send us cases for me to look at, if you or your clients have been affected by a fixed rate loan. We can make such a huge difference to their lives.