Business Banking Resolution Service has lost credibility and must be replaced by tribunal, says MP

However, a spokesman said the BBRS had left no stone unturned in its efforts to find cases where SMEs had complaints against the banks, including a number of wide-reaching marketing campaigns. The spokesman said the number of complainants has been vastly below the 6,000 originally estimated. So far 956 cases have registered with the BBRS, but many of these are ineligible for this scheme, often because they have already received a resolution elsewhere, which the BBRS does not have the power to overrule, or because they are smaller businesses and therefore fall under the jurisdiction of the FOS (Financial Ombudsman Service). Altogether, 101 of those who registered have received awards or settlements so far, the spokesman said.

The BBRS is a voluntary dispute resolution service established and funded by seven banks, intended to resolve complaints submitted by small and medium-sized businesses that allege mistreatment in their banking arrangements. Following Mr Townsend’s resignation, the BBRS announced it had brought forward the closure of its SME Liaison Panel.

In a statement for The Yorkshire Post, Mr Wragg said: "The BBRS lost the final shred of credibility it retained following the cynical dissolution of the SME liaison panel, which had for some time struggled against the prevailing headwind to ensure SME’s voices were heard. Given its pitiful track record and exorbitant cost, it looks like we might have to tear it down and start from scratch, a kick in the teeth for victims who have already waited far too long for their cases to be resolved. It has become clear that hopes for a voluntary system were misguided. Now is the time for a proper tribunal to get things moving and allow claimants to get on with their lives.”

The APPG believes a financial services tribunal should act as a permanent dispute resolution system. According to the APPG, the tribunal would be

specialist, inexpensive and provide litigants with their day in court to test the other side’s case. The MPs believe a tribunal would restore trust in financial services following a series of high-profile scandals.

In response a BBRS spokesman said: “Since its launch, the BBRS has helped hundreds of SMEs to tackle a range of complex business banking complaints, and many have walked away with life changing sums of money.

"To date substantially more than £1m in financial awards have been made to SMEs, and when BBRS intervention results in a direct settlement between SMEs and Banks, the BBRS is not always party to the final redress sum agreed, which means this figure is significantly higher. In addition to financial awards the BBRS has also secured non-financial awards that have had a transformational impact for SME owners. These have included rearranging lending terms and conditions, as well as discharges from personal guarantees and debt recovery rearrangements.”

“Case registrations have been lower than anticipated at the launch of the scheme, but the BBRS is continuing to do all that it can to encourage SMEs who are eligible for its contemporary scheme, which addresses business banking complaints dating from 2019 to the present day, to come forward and register their complaints.Like many other levy-funded organisations, the BBRS is fully funded by the industry not the public, receiving its running costs from the seven participating banks. The BBRS is currently funded to continue until the end of 2023.”

The spokesman said that the BBRS had shared the amount paid out to people who have made complaints against the banks through the adjudication route, but it is not privy to some of the "life-changing sums of money" which have been paid out to people who settled directly with the banks through conciliation or mediation between the bank and customer as a result of the BBRS’s services and intervention.

The statement added: “The BBRS board brought forward the closure of the SME Liaison Panel from December 2023. The terms of reference for the panel are clear that the BBRS board can choose to close the panel if they consider it is not working effectively which, without a chair, was the case.

"We also considered the former SME Liaison panel chair’s remarks that ‘despite the best efforts of fellow panel members, and of some within the BBRS, it has proved very difficult to make progress’ and it would be ‘better if the debate about how to improve matters takes place in a different forum’.

“In addition to the above it would not have been possible to complete the necessary process required to appoint a new chair in time for them to have a meaningful impact before the end of 2023, given there were only two meetings of the panel remaining before its closure.”

The spokesman added that the tribunal scheme proposed by the MPs would require significant legislation to allow for cases previously settled elsewhere to be looked at again.

He added: “This appeals body would be required to have the powers to overturn court rulings, contracts between banks and customers and the Financial Ombudsman Service and was never what the BBRS was set up to be; it is dispute resolution service not a compensation scheme.”