BBRS expands SME access to free dispute resolution
19 October 2020: Samantha Barrass, CEO at the Business Banking Resolution Service, explains the eligibility criteria for this free scheme and encourages members to register if they have a dispute and think they might come within its remit.
The Business Banking Resolution Service (BBRS) is being launched to plug a gap in SME access to banking dispute resolution. But what is the thinking behind the service and what is the gap it aims to plug? “The gap is the lack of access to a free dispute resolution service between SMEs and banks,” responds BBRS Chief Executive Barrass.
It all began with the financial services crisis of 2008 when SMEs had disputes with their banks and had no place to go to resolve them in an accessible, straightforward way. “They did not have access to the Financial Ombudsman Service and did not have access to another free, accessible dispute resolution service. Their only recourse was to the courts,” she says.
“That gap was particularly well-articulated in the Walker Review, which came out at the end of 2018,” says Barrass. “The gap has been filled in two ways.”
The first has been to expand the Financial Ombudsman Service from April 2019, so it is accessible to SMEs with a turnover of up to £6.5m (see below), but some SMEs will still not be covered and this is where the BBRS will come in – in two instances.
“The first of these two instances is where SMEs have historical disputes that would now be eligible for the Financial Ombudsman Service – they have up to £6.5m in turnover – but because they arose before the remit of the Financial Ombudsman Service was expanded, it left a group of SMEs without access to a free dispute resolution service,” she says.
“The other instance in which the BBRS will operate is called the contemporary scheme. This is for SMEs with a turnover of £6.5m to £10m that have disputes they don’t feel have been sorted out through their bank’s complaints mechanisms.”
Why the £10m? “There was some work done which indicated businesses that have a turnover of £10m or under are unlikely to be able to afford to fund their own dispute resolution, whether it be through the courts or otherwise,” responds Barrass.
“One way or another, with the expanded remit of the Financial Ombudsman Service, and with the BBRS picking up the historic disputes and also contemporary cases, we’ve been able to fill the gap SMEs have been struggling with.”
A clear message
Has the message landed, and are the right people coming to you? Barrass concedes there is always work to be done on the communications front. There are obvious complexities, given there are two organisations involved, different dates and different thresholds, as well as the requirement to use the banks’ own complaints process first. However, the two organisations have been working together and with other stakeholders to ensure the message is as clear as possible. Everyone wants to get this right.
“If you are not sure whether you are eligible, we will help you find out. If we are not the right people to come to, we will help direct you,” says Barrass. “And if you are not eligible for the BBRS, we will give you a very clear explanation why.”
Alternative dispute resolution
Of course, one of the key aims of the BBRS is to enable SMEs to avoid going to court. “Can SMEs really afford to go to court? That’s a whole separate issue. Going to court isn’t just a matter of expense, it’s a matter of time. Also, a court case is usually not the best option for preserving relationships between SMEs and lenders,” Barrass points out.
“This takes us neatly into the role of alternative dispute resolution which has played an important role in supporting economic growth for many years.”
Alternative dispute resolution usually delivers faster, cheaper results with which both parties are more likely to be comfortable. Government, regulators and banks all prefer this more accommodating process, and let’s not forget that the seven participating banks are also funding the BBRS.
“An adjudication is just one of the outcomes of our service,” says Barrass. “We will look to have a variety of alternative dispute resolution approaches – including mediation and early settlement – not just investigative adjudication.”
Speed is important
Barrass is keen to emphasise that this is a free service. “SMEs coming to the service should not have to pay a third party to support them. It is so much a free service that we have BBRS-appointed Customer Champions to support SMEs when they are putting their cases together.” Speed is incredibly important and Barrass is hopeful that a typical resolution will not take too many weeks or months.
There are seven banks both participating in and funding the BBRS. “The aim is to expand the number of banks further,” she says. “Others are interested, and we are encouraging them to join.”
Perhaps the final point should be around transparency and independence – especially since this free service is funded by the participating banks. “Transparency and independence are two of our core values,” she says.
“The key is that both the SMEs and the banks feel that their issue has been resolved. That will only happen if there is confidence that the BBRS is an independent and transparent dispute resolution service.”
What businesses are eligible to use the BBRS?
You must first have complained to your bank within required timescales and given them the opportunity to resolve your dispute. The BBRS is only available for eligible complaints that remain unresolved with your bank.
BBRS can only accept complaints for businesses registered in the following UK jurisdictions:
- Northern Ireland
The BBRS will operate both a historical scheme and a current scheme.
The historical scheme is designed for complaints raised by a business that was previously ineligible for the Financial Ombudsman Service but would be eligible under its expanded scope from 1 April 2019.
The current scheme will operate above the expanded scope of the Financial Ombudsman Service, accommodating larger businesses for which access to court processes is not readily available.
How is the eligibility for the BBRS different from the Financial Ombudsman Service?
According to the Financial Ombudsman Service rules:
A micro-enterprise is a business which:
- has a turnover or annual balance sheet that does not exceed €2m; and
- employs fewer than 10 employees
A small business is an enterprise which:
- is not a micro-enterprise;
- has an annual turnover of less than £6.5m; and
- has a balance sheet total of less than £5m or employs fewer than 50 employees.
The BBRS has different eligibility considerations to the Financial Ombudsman Service based on turnover and assets as follows:
For the period from 1 April 2019 onwards:
- Turnover up to £10m per annum; and
- Total assets up to £7.5m; and
- Your complaint is not eligible for the Financial Ombudsman Service
For the period from 1 December 2001 to 31 March 2019:
- Maximum turnover up to £6.5m per annum; and
- Total assets up to £5m.