In April the Financial Conduct Authority issued a Feedback Statement (FS19/2) on its Discussion Paper (DP18 /5) ‘A duty of care and potential alternative approaches’ affecting the financial services industry. The Feedback Statement reports on the outcomes of the consultation and summarises the views of those who responded to the consultation. This is a topic that has been on the regulatory agenda for several years, originally initiated by the Financial Services Consumer Panel (FSCP), but also considered by the Law Commission and the House of Lords Select Committee on Financial Exclusion, with varying degrees of support. The authors have assessed these reform proposals in an earlier blog post. Whilst it is difficult to draw any firm conclusions from this round of discussions as to the FCA’s future policy in this area, it does indicate how the FCA’s work on this topic is developing. (more…)
The Royal Bank of Scotland (RBS) has been placed under the spotlight with regards to its treatment of small and medium sized enterprises (SMEs) that experienced financial difficulties and were referred to its Global Restructuring Group (GRG). The Financial Conduct Authority (FCA), heavily criticised for its failure to publish the full report of an investigation into the business practices within RBS’s GRG has, in the last fortnight, released an interim summary of the report. The report itself makes for an uncomfortable read, highlighting serious issues with regards to the treatment of SMEs within RBS, amid allegations that it was this treatment that led to the failure of these SMEs, detrimentally affecting the livelihood of those involved with the businesses as a result.
This episode serves to highlight the lack of options available to SME customers who feel that they have been mistreated by their bank. Despite the FCA now indicating that they will take steps to extend the scope of the Financial Ombudsman Service (FOS) to enable SME access to the service, there are still questions about the scope of the regulatory regime and its applicability to SMEs. As will be demonstrated, the structure of the regime itself has, thus far, operated to exclude SMEs from access to redress. This blog will analyse the current position for SMEs and will assess the viability of potential reform to the FOS. (more…)