The Yorkshire Post has reported that Andrew Bailey, CEO of the Financial Conduct Authority, is working with Parliament to develop an adequate and independent complaint resolution for SMEs who believe that they have been badly advised or “mis-sold” a product by a financial institution.
Mr Bailey notes that the Financial Ombudsman Service (“FOS”) exists predominantly to resolve complaints about financial services’ businesses by individuals (the FOS can consider certain complaints by “micro enterprises”, which means small businesses employing less than ten people and with a turnover or annual balance sheet of Euro 2 million or less). Therefore, he said that he was keen to see the establishment of an effective dispute resolution mechanism for SMEs, recognising the sometime prohibitive costs of bringing Court proceedings. Mr Bailey added that the idea was backed by a number of MPs and the Government has said that it would look into it.
The devil will really be in the detail here and the FCA’s idea seems to be very much in its infancy. For example, it is not clear whether the proposed dispute reclusion mechanism would be created via an expansion of the FOS’ existing jurisdiction or an entirely new scheme sitting inside or outside the auspices of the Court system or mediator providers.
The messages therefore for banks and other financial institutions at the moment is to watch this space but be aware of the FCA’s thinking about the future of complaint resolution and the way in which the wind may be blowing.