A deep rethink is needed of the whole system of managing complaints from small businesses against their banks, according to new findings from an independent dispute resolution body, published today.

The Business Banking Resolution Service (BBRS) has released the interim findings of a study into how a new, more supportive approach to settling disagreements between businesses in the SME sector and banking service providers could work.

A "live pilot", set up at the end of last year, has taken on board over 40 complaints by SME customers against their banks, some recent and some dating back to the 2008 financial crisis or before.

Following the 2018 Walker review of unresolved SME disputes with their banks, the BBRS has been set up as a non-profit organisation by seven participating banks and a group of key stakeholders as equal partners. The review called for dispute resolution routes for SMEs with their financial institutions without going to court, and for assessment to be on the basis of what is "fair and reasonable" (as the Financial Ombudsman Service does for complaints in its scope) rather than contractual legal obligation.

The pilot study approach was based on interacting with the customer at the outset rather than getting them to fill in a lengthy form; allowing them time where needed; making small adjustments where needed to improve the process; attempting to adopt the approach that best fitted each individual, and training staff accordingly; and allocating a customer champion to each case to assist customers in identifying the most relevant evidence and continue dialogue as the case progresses, without acting as advocates for them.

The BBRS is also attempting to ensure it gets to the heart of a complaint. Details of its eligibility criteria are still being finalised, and the live pilot has contributed to shaping these criteria.

Thanking the participating customers and banks for committing to the service, Lewis Shand Smith, the BBRS’ independent chair, said: "It has never been more important for British businesses to get fair treatment from their banks. Doing so will, in turn, safeguard the reputation of the sector. The BBRS will play a vital role in making sure this happens.

"In establishing our service, we have recognised the need for a deep rethink of the way disputes between SMEs and their banks are handled. The live pilot is adopting a human and flexible approach, as an alternative to the stress and cost of seeking to resolve complaints through the courts.

"The live pilot is a significant milestone on the journey to getting the BBRS fully operational for the benefit of all of its stakeholders. We will continue to learn from the live pilot as we move towards implementation this year."

Alexandra Marks, chief adjudicator at the BBRS, added: "We have been discovering a lot about some difficult and often distressing cases, and the importance of handling these sensitively as well as fairly. When dealing with disputes it is not possible to please everyone all of the time, but our ambition as an independent organisation is to reach fair and reasonable outcomes which bring closure to both parties.

"The commitment of our customers participating in the pilot phase has been commendable, as is the patience of those still waiting for their cases to be started. The progress of the service to date has been made possible by the far-sightedness and support of the participating banks and our wider stakeholder group. I am looking forward to the launch of the full service later this year."

Click here to view the report.