Small Businesses Need Protection From Big Bad Banks

23rd January 2018.

The Financial Conduct Authority (FCA) has demanded a wider net for businesses protected by the Financial Ombudsman Service (FOS) in the event of bad banking. Currently, only individuals, or ‘micro-firms’ with less than 10 employees, are allowed to complain to the FOS and FCA has demanded a rethink. More firms should be awarded the opportunity to voice concerns and avoid scandals, which would help prevent crises like RBS’ Global Restructuring Group. A number of our members at the Credit Protection Association have had to deal with the fallout from such events, the outreach of which could have been reduced if firms had the opportunity to speak up.

The FCA has recently stated in a consultation paper that it would like more small businesses to be protected from bad banking to avoid scandals such as those seen at the Royal Bank of Scotland and Lloyds Banking Group.

FCA chief Andrew Bailey said: “It was assumed small firms could essentially look after themselves, but what we’ve learnt from these unfortunate episodes is that it’s very hard for small firms when a large bank is on the other side of the table.”

While big banks have set up compensation schemes after such scandals they were met with criticism, with many doubting their impartiality.

“You can never get beyond the perception that all the rules have been set up by a firm”, Mr Bailey added.

For this reason, getting this support from the FOS is essential. Mr Bailey insists that the service is “very rigorous about their independence” and set up by Parliament and funded by levies paid by the industry.

The City watchdog has asked for responses to its consultation by April 22, with final rules to be published this summer. If the complaints scheme is not extended, Mr Bailey said an alternative could be some form of independent tribunal system, which would need to be put in place by the Government.

While the collapse of Carillion continues to reverberate through the whole business world, the vulnerability of small business has become painfully clear. It is essential that they have the opportunity to speak up if they find themselves in a financial scrape. In a desperate effort to achieve funding, businesses can find themselves in bad situations, fast. We recommend all owners come to credit management companies like the Credit Protection Association before they pursue high street lenders.  We can free up cash flow through debt recovery services which will leave you free to promptly pursue new ventures! Get in touch with our team with the details below!

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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