Suzi Smith: Business Banking Resolution Service is a positive step for SMEs
Suzi Smith, commercial litigation associate at Shoosmiths in Scotland, discusses the significance of the recent launch of the Business Banking Resolution Service (BBRS) for SMEs.
The Business Banking Resolution Service (BBRS), launched on 15 February 2021, is a new dispute resolution service aimed at resolving complaints that eligible small to medium enterprises (SMEs) have made against banks relating to certain schemes. These complaints (and the schemes) can be both current and historic.
The launch of the service comes on the heels of the 2018 Walker Report, in which the dispute resolution landscape of the banking industry was investigated and commitments were made to do more for SMEs in the UK.
In order to be classified as eligible, the SME must meet certain financial criteria, which are separate for businesses, charities and trusts. Once these criteria have been met, there are also several steps that an SME must take or have taken prior to a complaint being brought to the BBRS. These steps include:
- The SME should have raised the complaint with the bank first.
- The complaint should relate to a lending or payment service provided by a bank.
- The complaint must be one that can’t be dealt with by the Financial Ombudsman Service (FOS). The aim of the BBRS is to “fill in the gaps” with regards to complaints that the FOS can’t deal with.
So how can an SME’s complaint arrive with the BBRS?
The process is voluntary, with the SME and the bank in question (which must form part of one of the seven participating bank groups) agreeing by contract for the SME’s complaint to be submitted to the BBRS. The complaint must not be in litigation or have been in litigation and settled.
The BBRS will then make a determination in the case. The BBRS can make determinations relating to financial and non-financial loss, with a threshold of £600,000 being awarded against a bank for financial loss suffered by an SME. An SME can then accept or reject the determination. If it accepts, the determination becomes binding on both the bank and the SME. If the SME rejects the determination, it is not binding.
Currently, the BBRS, created with a view to restore trust between banks and their businesses, is at its fledgling stage. Many banks are still to join the service and potentially when it is up to full capacity, the service will be dealing with thousands of complaints.
The BBRS provides a more open facility for SMEs to engage with complaints they have with services provided by their banks. Nevertheless, many banks welcome the implementation of the service, as it will likely reduce expensive and lengthy litigation in the long term. While still in its infancy, the BBRS will undoubtedly be looking to the past and will be seeking to avoid many of the early pitfalls that the FOS suffered.