UPDATED: Businesses that feel they have been unfairly treated by the banks will have somewhere new to turn to from November.

Business Banking Resolution Service (BBRS) will open its doors to complaints from unhappy business banking customers from mid-November.

The dispute resolution service will adjudicate in arguments between banks and unhappy SME borrowers and means that businesses do not have to resort to expensive and risky litigation.

>See also: Nearly half of small businesses do not intend to repay government loans

However, the Business Banking Resolution Service’s contemporary scheme (April 1 2019 onwards) will only be open to larger SMEs with turnover of up to £10m per annum and assets up to £7.5m.

Other complaints will continue to be handled by the Financial Ombudsman Service (FOS), particularly any disputes over bounce back loans.

BBRS has come into existence following widely publicised unhappiness from SMEs about how they were treated after the 2008 financial crisis, often with loans being unfairly called in without warning.

Following pressure from MPs, especially the All Party Parliamentary Group on Fair Business Banking (APPG), a working group with representatives from the SME Alliance, Federation of Small Business and others, set out plans for an impartial ombudsman.

>See also: Half of small businesses will never repay Bounce Back Loans, warn banks

Crucially, the BBRS will be able to investigate bank lending grievances going back to 2001, giving a voice to those who feel they have been mistreated. Historical disputes will be limited to businesses which at the time had turnover of £6.5m per annum; and total assets up to £5m

BBRS chairman Lewis Shand Smith says that between them the BBRS and the FOS will cover more than 90 per cent of all small businesses.

While its core process will be investigating complaints, the BBRS will have a range of tools from early settlement through to formal mediation.

Shand Smith said: “This is a service that didn’t exist before. It’s there to support SMEs and give you confidence to take out a loan. It redresses the inequality of arms even between a fairly large business and the banks. There’s a safety net here that wasn’t there before.

“If something goes wrong, you don’t have to go through litigation to get things right. Banks will be bound by the BBRS decision. It takes the risk away, it takes the cost away, and it takes the stress of litigation away. It will be a far faster process than having to go through the civil courts.”

BBRS originally expected to be investigating fewer than 1,000 contemporary cases a year but with COVID-19 it expects the workload to be much bigger. Although microbusiness complaints are still covered by the FOS, some will still qualify for BBRS help.

By launching in November, BBRS has some breathing space while coronavirus business interruption loans as interest free for 12 months and it then expects complaints to rise once companies start repaying loans. However, BBRS’s own research showed that of those businesses which had accessed Government-guaranteed loans, 43 per cent of those businessses said they do not expect to repay them, either because they do not expect to repay them, or because they do not believe that the Government will pursue the debt. Undoubtedly there will be a welter of indignation as businesses start having to repay CBILS loans.

Shand Smith said: “The unknown is going to be those who were not given CBILS deals but felt they should have or didn’t like the way they were treated when getting the loan. Also, the rules have been changed the rules halfway through the scheme, which is another sore point.”

Unlike the FORS, which has hundreds of staff members, at first, the BBRS will only have six in-house staff but will be able to scale by bringing in outside resources. Most of the casework will be outsourced to mediation specialist Centre for Dispute Resolution (CEDR). The chief BBRS adjudicator is deputy high court judge Alexandra Marks.

The final annual budget has yet to be agreed by the seven high street banks funding it but will need to be elastic, as BBRS is a dispute-led service.

Shand Smith is a former Scottish Episcopalian priest who most recently spent 10 years as chief ombudsman in energy, telecoms and property.

Said Shand Smith: “We really want your readers to use this service. People will be listened to and have the opportunity to tell their story. Often there is deep hurt. The irony is that even if people ‘have their day in court’, they still aren’t listened to because a lawyer speaks on your behalf.”

Further reading

Business owners could sue banks that drove them into bankruptcy