Today, Simon Walker CBE, independent chair of the UK SME Complaints and Resolutions Review, has published his highly anticipated report suggesting changes to the complaints and alternative dispute resolution procedures for small and medium-sized enterprises (SMEs). Mr Walker, former Director-General of the Institute of Directors, was appointed by UK Finance. In his report (the “Report”), he makes a number of recommendations for new routes for SMEs to resolve disputes with their financial institutions without going to court.

These recommendations are complementary to the proposals published by the Financial Conduct Authority (“FCA”) last week and also take into account recommendations from the All Party Parliamentary Group on Fair Business Banking. The Report supports the FCA’s decisions to increase access to the Financial Ombudsman Service (“FOS”) to larger SMEs (those with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m) and also recommends that the FCA’s proposals in consultation paper CP18/31 (that the maximum amount of compensation that the FOS can require firms to pay out be raised to £350,000) be adopted. For more information on the FCA’s decisions and proposals, please see here.

However, the Report goes further than the FCA and makes a number of additional proposals, which include recommendations that:

  • A specialised business banking division should be set up as a division within the FOS with the job of resolving business and banking complaints brought not only by microenterprises but also by the larger SMEs referred to above.
  • An expert advisory group should be established to advise this new FOS division on technical legal and banking issues and to give guidance on business mass claims.
  • UK banks should agree, on a voluntary basis, to establish and fund a voluntary ombudsman scheme for SMEs that will not be ‘eligible complainants’ to the FOS, namely those businesses with a turnover of between £6.5m and £10m. The report also recommends that this scheme should deal with some legacy complaints, provided they have not been dealt with by any court or arbitration body, although it does not propose a mechanism for this.
  • Once the new banking ombudsman scheme has been firmly established (the suggested timescale is after around two years) the size of business within its scope should be reviewed (with the possibility of extending it to businesses with annual turnover not exceeding 50 million euros) and the compensation award limit should potentially be raised to £600,000.
  • Data links between the banking ombudsman division, the FCA and appropriate government department should be upgraded to provide an ‘early warning system’ against future mis-selling or malpractice.
  • There should be formal processes for senior management of the major UK banks to hear “stories” from customers and respond openly, as well as for banks to discuss current day circumstances and prevention tactics.
  • Banks should take greater care to address imbalances between banks and business customers, particularly in relation to lending practices, including practices around debt sales and taking security over borrowers’ sole residences.
  • UK Finance should examine ways of co-ordinating member banks’ complaints data to ensure broad comparability.


  • The Report stops short of recommending the establishment of a formal financial services tribunal, citing both concerns about costs and also the potential for continuing imbalances in power between banks and business customers. However, the recommendations do consist of significant changes and an almost complete rebranding of the FOS.
  • There was criticism of the FCA’s announcement last week in relation to the larger SMEs which were still excluded from accessing the FOS. This may, to a greater or lesser degree, be addressed in this report with the idea of a voluntary scheme through which businesses up to £10m can resolve their disputes.
  • However, the proposals for ‘legacy disputes’ to be dealt with are relatively undeveloped. A system of dealing with such matters will need to have confidence of all parties to ensure it does not simply rehearse previous matters and brings finality to historic concerns.

A copy of the Report can be accessed here.