Source · Select Committees · Treasury Committee
Recommendation 7
7
Not Addressed
Paragraph: 59
Business Banking Resolution Service lacks perceived independence from the financial industry
Conclusion
There is no clear evidence that the seven participating banks control the BBRS on an operational level. However, the structure and remit of the BBRS were determined with their consent. Dispute resolution must be independent, and perhaps as importantly, be seen to be independent of the financial services industry. Despite the assurances we have been given to the contrary, this does not appear to have been the case with the BBRS.
Government response summary AI-generated
The government notes the committee's conclusion regarding the Business Banking Resolution Service's (BBRS) perceived lack of independence, and states that the BBRS will close to new registrations on 13 December 2024, with its future being a matter for the BBRS itself.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
59
Government Response
Not Addressed
HM Government · verbatim extract
Not Addressed
The BBRS is not fit for purpose in providing alternative dispute resolution to the 55,000 SMEs who fall outside of the FOS’ thresholds and this service should close as originally planned. (Paragraph 60) 13. The Government notes the Committee’s conclusions in this area, and notes the decision that has been taken for the Business Banking Resolution Service (BBRS) to close to new registrations on 13 December 2024. Decisions regarding the future of the Business Banking Resolution Service (BBRS) are a matter for the BBRS, as an independent service, decided in discussion with participating banks and SME representatives. HM Treasury must find a way to continue to meet the dispute resolution needs of those SMEs ineligible for FOS access (including considering whether the FCA was correct in assuming that expanding the FOS’ thresholds would be a disproportionate cost). A consultation on a replacement mechanism must take place by year end 2024. (Paragraph 61) 14. The Government is committed to ensuring that SMEs have appropriate access to redress now and in the future, with proportionate regulation and oversight of business banking. 15. As the Committee’s work has noted, more than 99% of UK businesses currently have access to independent dispute resolution through the FOS, without prejudice to the ability to pursue litigation as a means of redress. 16. As a new Government, we consider that a full consultation is not warranted at this stage, and are doubtful there is a sufficient volume of customers to justify a new dispute mechanism (outside the FOS’ perimeter). 17. We will continue to monitor the area of SME disputes–as the FCA does in relation to determining the jurisdiction of the FOS–and will inform the Committee as needed of any developments. HM Treasury and the FCA should also continue to keep resourcing of the FOS under active review to ensure that it has the prerequisite capacity and capability to serve the majority of the SME community. (Paragraph 62) 18. We refer the Committee to our response above: we will continue our engagement with the FCA and the FOS, ensuring we are addressing relevant resourcing issues, ensuring that FOS rules are aligned with the current financial services landscape and correctly serving the SME community.
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