Major banks and other financial services institutions are often in dispute with customers who deserve protection. Access to court is costly. The FOS ombudsman scheme is inadequate. The FCA is not equipped to resolve disputes. Tribunals offer scrutiny, justice and censure which deters misconduct.
Major banks and other financial services institutions, who are all legally and financially sophisticated, are far too often locked in complex financial disputes with customers.
Such disputes are often difficult for the financial services regulator and ombudsman to resolve and beyond their capability and true remit.
Only a tiny fraction of financial services disputes are ever litigated and the vast majority of good litigation cases settle which means there is a lack of meaningful court precedents to force financial services institutions to deal with customer disputes fairly, particularly where those disputes have £multimillion financial values.
This leaves a vacuum for a Financial Services Tribunal which could offer not only judicial scrutiny over the financial services industry but also provide a sense of justice for customers who might finally get their ‘day in court’.
Access to the court system is costly and therefore risky for most SMEs however there is little real costs risk for most financial services institutions, for example RBS which has a market capitalisation in excess of £25 billion.
The FOS financial ombudsman scheme is inadequate because it is designed to be simple and to deal with simple disputes with a low financial value of less than £150,000.
The FCA is a regulator and was never mandated to be an arbiter of disputes is therefore completely unequipped to resolve disputes in spite of its mandate to protect consumers.
The failed FSA-backed IRHP scheme in which banks were allowed to determine compensation for their own wrongdoing and the flawed recently announced RBS GRG scheme, which adopts the same self-determined compensation flaw, each highlight the justice gap that UK SMEs currently face.
Perhaps most importantly for every member of the public is that almost all of us have relationships with financial services institutions and public censure by a Financial Services Tribunal would inevitably deter future misconduct.
M Ali Akram, LEXLAW
Middle Temple, City of London