Andy leads the work of the Financial Ombudsman Service’s small business team. He joined the Financial Ombudsman Service after a long career as a senior civil servant. He is a chartered accountant, having originally trained with Arthur Andersen, and spent several years advising businesses on strategy and business transactions. He has also served as trustee of a few charities.
In this blog, Andy shares some of the work of the small business team over the last three years. The team, with its experienced ombudsmen, resolve complaints across a wide range of commercial products and services. He also outlines some of the ways the team shares insight and engages with stakeholders, including through our SME Advisory Group and SME Expert Panel.
We’ve been able to investigate complaints from small businesses since April 2019. Before then, only the smallest businesses – microenterprises – could ask us to investigate a complaint. Over the last three years, global events have dramatically affected the financial landscape for small businesses and influenced the complaints they’ve brought to us.
Building on our experience and expertise
At the point our remit expanded, the Financial Ombudsman Service had nearly 20 years’ experience dealing with complaints, including several thousand complaints from microenterprises, and small charities and trusts each year. Many business complaints concern similar issues to those from consumers – for example, a bank not doing what the customer thought it should, or an insurance claim being declined.
However, we knew that with the more complex operations and circumstances of larger businesses would come more complex problems for us to investigate. So we created our dedicated small business team – a team of experienced investigators and ombudsmen - to reach fair and timely decisions across all commercial products and services. This team was supported by dedicated legal resource and access to a panel of external experts to provide specialist advice on less common technical areas and the financial arrangements of small businesses.
We also established an advisory group, made up of small business representative groups, financial services trade bodies and organisations which provide advice to businesses. The group meets twice a year to provide insight in general terms on problems arising for small businesses with financial services providers and to comment on our approach to casework.
Over the last three years, we’ve helped thousands of businesses by providing a fair, reasonable and clearly-explained decision, bringing a resolution to disputes which at times have been hard-fought. We’ve also been proactive in sharing our approach with financial firms so they can act earlier to address problems and prevent complaints arising.
Resolving a variety of complaints
During its first two years, our small business team resolved around 4,000 complaints, of which around 1,000 were from newly eligible businesses. But in its third year (2021/22), the team resolved more than in the first two years combined, addressing almost 5,000 complaints, of which 1,700 were from newly eligible small businesses.
The increase in complaint volumes was in large part stimulated by two pandemic-related issues: business interruption insurance (BII) and the Government-backed loan schemes.
The Financial Ombudsman Service has now resolved over 3,800 complaints relating to BII and over 3,100 complaints relating to the Government-backed loan schemes, with a further 300 and 450 cases respectively still in progress.
In both cases, there have been periods when we’ve had to pause our investigations to await either a critical legal judgment or regulatory guidance, including the progression of the FCA’s ‘test case’ through the courts. But we’ve sought to progress issues wherever we can, working proactively with insurers and lenders to encourage the resolution of issues in a consistent and timely way. We created dedicated pages on our website to inform financial businesses and those considering bringing a complaint of our approach.
Alongside these pandemic-related issues, the team has continued to handle complaints across all other financial products and services including, for example, general banking, commercial loans, commercial property insurance, savings, commercial motor insurance and merchant services. As with complaints from individual consumers, the team has seen an increasing volume of complaints arising from frauds and scams, especially invoice intercept scams, senior manager impersonation frauds and insider frauds. The team has also continued to address complaints in other high-profile areas, such as in relation to RBS’s Global Restructuring Group, fixed-rate loans, interest-rate hedging products and the Business Banking Switch Scheme.
The difference we’ve made
Across the broad range of the team’s work, and despite the volatility of new complaint volumes arising from the pandemic, the team has brought effective resolution and impartial clarity to thousands of businesses in dispute with their financial service provider. In some cases, we’ve explained why we believe the financial firm has acted fairly and reasonably – at least enabling the owners and managers of the business to be clear on where they stand. In other cases, our intervention has brought significant change to the business’s circumstances, putting a difficult situation right – in some instances even saving the business from failing.
It is not an easy time to be a small business, with effects from the pandemic continuing alongside increased supply costs, rising interest rates, and the cost of living crisis dampening demand for many goods and services. When things are tough for customers of financial services, we typically see more complaints arise about the provision of those services, so we’re anticipating a rise in complaints in the months ahead.
Our other blog posts
Vehicle theft and insurance claims – some of the recent issues we’ve seen in complaints
Travel disruption, delays and cancellations – trends in travel insurance complaints and guidance for insurers
A new Consumer Duty – setting a higher standard of care for consumers