By Chris Dorrell
Representatives of small and medium-sized businesses (SME) have hit out at “misleading” and “inaccurate” comments made by the chief executive of a banking resolution scheme in parliament last week.
Mark Grimshaw, chief executive of the Business Banking Resolution Service (BBRS), was forced to defend the organisation’s record in a Parliamentary hearing last week.
Since going live in 2021, over 1,000 cases have been registered with the organisation but only 137 cases have been resolved.
When it was launched, it was thought the BBRS, which is entirely funded by seven participating banks, could resolve as many as 6,000 cases in three years.
The BBRS says it has paid out “nearly £2m” in compensation. It has cost the seven participating banks £40m to establish and run.
Grimshaw argued that the BBRS’s tight eligibility criteria was a key reason why it had not resolved as many cases as was expected. He said the eligibility rules were agreed “unanimously” by both participating banks and SMEs.
However, in a letter to City A.M., four SMEs representatives who sat on the SME Liaison Panel, which represented SMEs in the BBRS, said “the claims made by Mark Grimshaw… are misleading and in no way represent the position of many of the SME representatives”.
“Mr. Grimshaw implied that the SME community fully supported the scheme when it was established,” the SMEs said. “This is an inaccurate representation of the events that led up to the creation of the BBRS”.
“Through our membership of the Steering Group, we had repeatedly indicated our significant reservations about the model and scope of eligibility, which was determined by terms of reference into which the SME representatives had no say,” the signatories said.
The SME representatives claim that their sign-off was based on a number of conditions, including that the BBRS would engage “constructively” to make the scheme fit for purpose if it was not working to resolve historic complaints.
However, the letter claimed that the BBRS never engaged with the review process meaningfully.
“The Post Implementation Review 2, which was a condition of sign-off of the initial scheme, recommended that the BBRS actively engage in and facilitate the eligibility review process, yet it did nothing,” the letter claims.
“At no time did it do anything more than act as a tick box exercise,” they alleged.
Grimshaw also claimed that the decision to close down the SME Liaison Panel in March last year was taken “essentially in conjunction” with the panel’s chair.
But the SME letter said: “This is not the case, and there were extensive attempts by the SME Liaison Panel to remain engaged, all of which were rebuffed or ignored by the BBRS.
“The SME Liaison Panel was eventually disbanded by the BBRS with no consultation, effectively locking out any further discussions with SMEs, making the BBRS’s only stakeholder involvement with the banks.
“Given the failure of the BBRS, those who were excluded from the BBRS process must be able to finally have their cases heard and settled. This is a gross miscarriage of justice that has rumbled on far too long.”
A BBRS spokesperson said: “The BBRS can only operate within the rules established at set up and it has no power to change the eligibility criteria, which were unanimously agreed by the ISG members”.
“The BBRS was set up to serve a narrow and clearly defined market of SME business banking complaints. The organisation was never set up as an appeals body and cannot consider cases that have already been to some other schemes, the [Financial Ombudsman Service] or the courts. The BBRS does not have the statutory powers required to overrule these bodies.”
