FLA flags up need for new redress mechanism28/11/2018
Calls for the introduction of a tribunal system to handle SME complaints about non-regulated financial services have gathered pace during the last six months, says Simon Goldie, Head of Asset Finance at the Finance & Leasing Association (“FLA”).
He writes, "Although the Financial Conduct Authority (FCA) has publicly confirmed its intention to extend the remit of the Financial Ombudsman Service (FOS) to cover such complaints, this was not the FCA’s original preference. But because a tribunal system would have required primary legislation, the view has been taken that – in the short term at least – giving larger SMEs access to FOS is the best that can be done. We are actively working with FOS to ensure they understand this market before they take on this big new responsibility.
"When the FCA consulted on the issues in January, we also argued that any new redress mechanism needed to be part of a wider rethink of how business lending is regulated. It makes little sense to focus on improving complaint resolution for SMEs, without examining the overall regulatory framework."
At the time of the current consumer credit regime’s introduction in April 2014, the Government indicated that it understood that the regime – still largely based on the 1974 Consumer Credit Act (CCA) – was inappropriate for the business lending markets. However, due to the short timescale, the regulatory boundary was never adjusted to reflect the differences between consumer and business lending, and the CCA continues to treat hundreds of thousands of small businesses as if they were individual consumers.
A fuller version of this story appears in the next issue of Leasing World, out in December.