More SMEs to get access to the Financial Ombudsman?

Firms with fewer than 50 employees, an annual turnover below £6.5 million and gross assets under £5 million would be able to take disputes with financial services firms to the Financial Ombudsman, under Financial Conduct Authority proposals to extend current criteria that allow access to the Ombudsman service only to individual consumers and around 5.5 million micro-enterprises with fewer than 10 staff – the smallest type of business.

The FCA claims that 160,000 businesses would benefit from the proposals, which follow a review of the protections for small and medium sized businesses that found many of those who do not have access to the Ombudsman service would struggle in practice to take their dispute to court.

The Ombudsman can currently consider complaints from eligible complainants about any regulated activity as well as some unregulated activities, including lending to companies or the activities of business turnaround units.

The FCA also proposes extending eligibility to personal guarantors of corporate loans, provided the borrowing business meets the eligibility criteria.

While many small firms have welcomed the proposals, MPs on the All Party Parliamentary Group (APPG) on Fair Business Banking have said that many firms would still not get access to justice and have suggested a tribunal system to deal with disputes instead.

The FCA intends to publish a policy statement making final rules in summer, 2018.

The Credit Protection Association wants to see small businesses receive added protection against the rogue activity of banks. However cash flow is key to the survival of small businesses and many will have already been forced under by their bankers after being made to take on complex, expensive, unregulated services. Redress to the FOS will be too late for businesses already shut down. Small businesses need protection from the outset. CPA helps to maximise the cash flow within small businesses by prompting punctual payments by their customers and recovering debts that had been sitting on the balance sheet. This can keep many small businesses out of the clutches of their bankers and help them loosen the vice like grip.

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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