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Banks, Lenders & Investors Cash Flow & Forecasting General Rescue, Restructuring & Recovery Turnaround

Investigation of treatment of SMEs by banks – what next?

 

We reported in a recent blog on the announcement that the Treasury Select Committee (TSC) had begun investigating the banks’ treatment of SMEs, covering everything from lack of financing to bullying.

The first session heard evidence from Sir Andrew Large, Laurence Tomlinson and the Financial Conduct Authority and on February 25 it was the turn of Prof Russel Griggs OBE, Independent External Reviewer of the Banking Taskforce Appeals Process.

However, according to reports in the International Business Times, despite the best efforts of his interlocutors, Griggs’ evidence was less than critical of the banks’ behaviour and in his view SMEs’ opinions about banks were “more about perception than reality”. Here are just a couple of quotes:

“I don’t think I have ever seen a bank which has deliberately gone out of the way to upset the customer.”

And:  “Banks have also provided a lot of training for relationship managers over the last two years as well. Yes, [they are fit for purpose].”

Details of further sessions and formal terms of reference will apparently be announced in due course.

Unfortunately scrutiny of the TSC’s schedule for the next month on its website currently shows no further sessions yet.

While clearly investigations have to be thorough, objective and careful, one has to ask how many more SMEs will perish as a result of their bank’s actions due to the time taken to seek redress.

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Bully Banks fight back on behalf of SMEs

 

The Treasury Select Committee (TSC) has begun investigating the banks’ treatment of SMEs, covering everything from lack of financing to bullying.

The investigation follows media pressure and a number of reports, including the Tomlinson Report into complaints about RBS, and details relating to the Financial Conduct Authority’s investigation into mis-selling of Interest Rate Swaps (IRS) to SMEs.

Arguably, though, the pressure for a thorough investigation began in December 2011, with the formation of Bully Banks, an independent organisation to lobby for investigation and action on the IRS scandal. Membership of Bully Banks has now reached more than 2000 and all are SMEs.

Bully Banks (www.bully-banks.co.uk) has campaigned for action to help SMEs recover their money, but this year it widened its campaigning following Tomlinson and the emergence of another potential mis-selling scandal affecting banks’ use of the Enterprise Finance Guarantee Scheme (EFG),  which we was covered in a recent blog.

The investigation by the TSC would suggest the group may have achieved its objective, at least partially.

The question is whether the TSC has the teeth to do what Bully Banks wants and if it does find evidence of bank mistreatment of SMEs, what recommendations would you want to see and what likelihood is there of the banks actually taking notice or acting?