Business Banking Resolution Service – An Update

03 Mar 2021

It’s been a month since the Business Banking Resolution Service (BBRS) began investigating disputes between businesses and their lenders. But how proactive have the banks been in resolving complaints so far, particularly those that date back several decades? Robert Ferdinando, Solicitor in the Commercial Dispute Resolution team at BLM, takes a look.

Plugging the gap

The BBRS has been set up to plug a gap in the dispute resolution regime of British banking, so that SMEs may raise disputes with lenders which might otherwise have been dealt with by the Financial Ombudsman Service (FOS) had the borrower been a consumer.  Without such a service, there had – up until now - been no formal mechanism through which to resolve disputes between SMEs and lenders without resorting to legal proceedings. In many instances this can prove to be disproportionately costly.

The BBRS is a voluntary scheme for banks to sign up to, and currently seven of the largest lenders have done so.  However the BBRS are hopeful that more lenders will follow suit so that greater protection is afforded to those with disputes to raise.

Dispute numbers rising?

Initially intended to handle disputes dating back to as early as 2001, the BBRS’ remit will now likely include a much larger sample of disputes given the various issues relating to the financing of SMEs during the COVID-19 pandemic, including the rollout of loans under the Coronavirus Business Interruption Loan Scheme (CBILS).  CBILS, whilst a lifeline for many SMEs, will undoubtedly lead to issues for some borrowers when repayments start to kick in, particularly if the recovery from COVID-19 is not as swift in some sectors as hoped.

Concerns over resolving claims

Despite the benefits of this scheme being rolled out, the All Party Parliamentary Group on Fair Business Banking (the APPG), a body which was instrumental in creating the BBRS, have recently expressed concern about the commitment of banks to resolve historic complaints.  Whilst it is comforting for SMEs to see that such old complaints will fall within the BBRS’ remit, the process does require the lender’s commitment to the process in order to resolve the complaint.  Lenders may consider that they will be able to circumvent the process for historic complaints and the APPG has stressed that that BBRS depends heavily on the good faith of the lenders.  One of the key tenets of the service is to restore an element of trust between banks and businesses, particularly those which were affected so badly by the 2008 banking crisis, and this will certainly be tested by lenders’ approach to complaints which may be around two decades old.

It is important to note that the APPG continues to encourage businesses to sign up to the BBRS if they have disputes to resolve, as only time and experience will tell us whether lenders’ engagement with the service meets its much anticipated expectations.  Nevertheless, the APPG is, for now, reserving its judgement, as it is of course only early days at this stage.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

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