More small businesses are to be given access to the financial ombudsman to complain about their banks under plans put forward by the City watchdog after scandals at Royal Bank of Scotland and Lloyds.
The Financial Conduct Authority (FCA) said it wanted to give as many as 160,000 more companies access to the ombudsman service, which until now has handled relatively small complaints on behalf of consumers and the smallest of firms.
The ombudsman solved 336,381 complaints last year, with compensation awarded to one in six customers who had problems with a financial firm.
Under the new rules, companies with fewer than 50 employees, turnover of less than £6.5m and assets of up to £5m would be given access.
The development follows the scandal at majority state-owned RBS, where there were accusations that its global restructuring group had systemically mistreated small firms. Companies also suffered at the hands of a fraudulent loans scam linked to the Reading branch of HBOS, now part of Lloyds.
Only the smallest firms, with fewer than 10 staff and revenues of less than £2m, currently have the ability to make complaints. Many companies which are slightly larger still lack the financial firepower to take on the big banks in the courts. RBS had previously said that companies with turnover of as much as £20m had been put into its Global Restructuring Group.
Andrew Bailey, the FCA chief executive, said: “What we’ve learnt from these unfortunate episodes is that it’s a very tall order for a small firm to take a major bank to court in this type of case … There is a gap in the system – the gap is access to an independent and affordable complaints-handling system.”
However, the changes are likely to disappoint MPs who have been pushing for more protections for small businesses. The Labour MP Clive Lewis, who opened a debate in parliament over the scandal at RBS last week, said that expanding the ombudsman service “is not the right solution for what is a very complex problem”.
Bailey said the changes would be implemented by the autumn and that any further avenues to redress for small firms would require parliament to pass new laws. He added: “The issue has been around a while and we have decided it’s time to get on with it, frankly. If they [MPs] want to do more they should do it.”
RBS and Barclays said they were supportive of the FCA’s plans to expand the remit of the financial ombudsman to take in small firms.
Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.