The Chancellor's proposal for an ombudsman to cope with complaints from small firms is being fiercely resisted by the clearing banks, which maintain that the courts are the right place for incorporated businesses to settle their disputes.
The alternative plan proposed by Sir Nicholas in his role as president of the British Bankers Association acknowledges a key problem with the present arrangements. Small businesses find it difficult to take conventional legal action in disputes with their banks because of the length of time involved and the high costs.
Instead he has suggested a speeded-up process for small business disputes similar to small claims courts. The new procedure would be open to all types of disputes involving small businesses and would not be confined to arguments with their banks.
The outline proposal has yet to be fleshed out and might be nearer an arbitration scheme than a court. But Sir Nicholas has made it clear to the Chancellor that the banks would be happy to discuss contributing to the funding of an initiative on these lines if a scheme can be worked out.
The banks are not happy to pay for a small business ombudsman because they believe it would have to exclude the terms under which loans are advanced, which are a matter for commercial judgement. The volume of complaints would not therefore be enough to justify paying for an ombudsman, the association believes.Reuse content