Over two years of preparations culminated in the launch of the Business Banking Resolution Service ("BBRS" / "Scheme") on 15 February 2021. However, the roots of this new dispute resolution forum are deeper and go back to the fallout of the 2008 global financial crisis.
This short series will look in detail at the Scheme - set to be a "ground-breaking service for larger-sized SMEs with an unparalleled scope, mandate and level of expertise". First we consider the BBRS' formation and why it was established.
Why was the BBRS set up?
In March 2018, UK Finance launched a review into the complaints and Alternative Dispute Resolution ("ADR") landscape for the UK's Small and Medium Enterprise ("SME") market. Simon Walker was selected to chair an independent panel and the findings were published on 23 October 2018 (the "Walker Review").
The Walker Review's main focus was on SME customers that had made a complaint following the financial crisis of 2008 but might not have had access to an ADR process if they were unhappy with the complaint outcome. Walker identified three areas where action could be taken to improve outcomes for SMEs. Two of these were relevant to the BBRS:
- The Walker Review recommended the establishment of a voluntary ombudsman scheme for larger businesses (who would be ineligible for the Financial Ombudsman Service ("FOS")) and a voluntary scheme to consider historic SME banking disputes.
- The second was the need to rebuild relationships between banks and SME's. For this, the Walker review recommended a formal process with the support of major banks, to commit to a new system of dispute resolution to ensure past issues are not repeated.
UK Finance's response to the Walker Review (the "Response"), dated 1 December 2018 outlined a series of proposals made by seven UK banks (Barclays, CYBG, Danske Bank, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander) operating in the SME market to implement the recommendations in the Walker Review. The BBRS is the key output of the banks' Response.
How did we get here?
Although it was agreed that the BBRS would be funded by the banks that chose to participate in the Scheme. The banks that are currently signed up are Barclays, Virgin Money (including Yorkshire Bank and Clydesdale Bank PLC), Danske Bank, HSBC, Lloyds Banking Group, NatWest Group (including The Royal Bank of Scotland Plc, National Westminster Bank plc, Coutts & Company and Ulster Bank Limited (Northern Ireland)) and Santander.("Participating Banks") it was to be impartial and independently governed. Therefore, an independent dispute resolution service implementation steering group ("Steering Group") was formed in early 2019, to bring about the Scheme.
The Steering Group was chaired by Lewis Shand-Smith and included representatives for the Participating Banks, SMEs and the financial services industry. UK Finance's proposal for the establishment of a voluntary scheme to resolve complaints by larger businesses was welcomed by the Government, SME representatives and the wider industry, but there were competing views on how the Scheme should be delivered.
The following issues in particular were subject to much debate: