Small Businesses win 40 per cent of appeals on loans from high street banks

Forty per cent of small businesses that complained about being refused by the big five High Street banks after applying for a loan have had their claims upheld.

The number of successes is bound to fuel criticism that in many cases the banks have been too quick to turn down loan applications from businesses.

The British Bankers’ Association, which was instrumental in setting up the system, said the figures showed that banks had responded to the concerns of small businesses.

Fighting back: About 900 firms have made complaints under the appeals system

About 900 companies have made complaints under the appeals system launched last spring by the Business Finance Taskforce.

Although the taskforce was  created by the banks themselves, the appeals process is overseen by an independent arbiter, Professor Russel Griggs.

He previously led the CBI’s SME Council and was on the board of the Small Business Finance Forum, which ensures that the appeals  process is fair.

Griggs, who also sits on the Revenue’s administrative burdens adviser board, will publish a report into the appeals process next April. But he told Financial Mail that about  40 per cent of appeals had led to the borrowing company getting a better offer from its bank.

 

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He described the results as ‘extremely encouraging’.

The figures were announced just days after Sir Mervyn King, Governor of the Bank of England, clashed with the Treasury Select Committee after MPs suggested that poor  policy decisions by the Bank were to blame for low levels of lending  to small businesses. 

Earlier this month, the Bank announced that it would inject a  further £75 billion into the banking system through its policy of quantitative easing. King admitted that this might not lead directly to more lending to small businesses.

Griggs said it was important to encourage firms to appeal if they thought they had been treated unfairly. 

‘The reality is that retraining is needed on both sides,’ he said. ‘The banks are taking this on board and businesses also need to realise that we are in a different space from a few years ago.’

Phil McCabe, of the Forum of Private Business, welcomed the ‘relatively high’ success rate of the scheme so far.

‘This is a very valuable tool for businesses that feel aggrieved over a bank’s lending decision,’ he said. ‘It should help to address the understandable cynicism of some business owners.’

From Mail Online