Lamont in talks on banks watchdog

Click to follow
The Independent Online
THE Chancellor is sounding out the clearing banks on whether small businesses should have access to an ombudsman to examine complaints about the way they are treated by lenders.

The idea of an ombudsman is on the agenda of meetings this week between Norman Lamont and the chairmen and chief executives of the five main clearing banks, which began yesterday with Sir Peter Walters, chairman of Midland.

The Chancellor has been deluged with complaints from small businesses. But a report delivered 10 days ago by the Bank of England and not yet published largely clears the banks of accusations that they failed to pass on base rate cuts in full.

With anger running high about relationships with banks, a search is nevertheless under way at the Treasury for new measures.

An ombudsman scheme is likely to go ahead only if the banks respond with their own proposals for how it would work.

A Small Business Ombudsman would be a change of policy for the Government, which rejected a similar proposal by the Jack Committee on banking law.

A White Paper in March 1990 said the Banking Ombudsman gave redress to individuals, including unincorporated businesses, but companies would normally be in a better position to take action through the courts.

Last night bankers said that while there were advantages in having somewhere for angry small businesses to let off steam, there were practical problems, such as whether a second banking ombudsman would be needed.

Bankers also suggested that those who ran companies had some financial knowledge and did not need the same protection as consumers. As they had the benefit of limited liability they could pursue complaints through the courts. However, at least one bank saw advantages in a new ombudsman scheme for small businesses.

The Small Business Research Programme yesterday called for greater efforts to harness the supply of informal small business capital from 'business angels' by establishing more direct links between them and the firms. It also urged emphasis on businesses with clear growth strategies.

Commentary, page 21

Comments