Will Banking Standards Review Council improve things for SMEs?

Wednesday 21 May 2014

The creation of a new Banking Standards Review Council (BSRC), under the recommendations of Sir Richard Lambert, could go some way to improving financing conditions for small and medium-sized enterprises (SMEs).

In a document published on May 19th, it was proposed that a new watchdog be created to help the UK banking system improve its reputation and build trust once again.

The BSRC will be funded by Britain's biggest banks and, according to the Banking Standards Review, will monitor banking culture - including codes of conduct - scrutinise the competency of those working in the sector and examine customer data relating to satisfaction and complaints.

For the existing self-employed and those setting up a business, the changes could go some way to creating a fairer marketplace.

James Roberts, digital content and development manager at Brookson, said: "We know that access to finance for SMEs is one of the biggest challenges facing the UK's entrepreneurs and while the government has made steps to encourage big banks to lend, there is still some way to go. These new proposals could help to improve matters by adding a layer of transparency to the banking system, which may shed light on exactly where things are going wrong.

"SMEs are the driving force behind the UK's economy and it's crucial they get the support they need from all financial institutions - not just alternative lenders. If the banking system doesn't change, not only will there continue to be distrust between lenders and businesses, but SMEs will be unable to grow and Britain could suffer along with them."

There's certainly hope that the creation of the Banking Standards Review Council will lead to better relationships between financial institutions and businesses.

Dr Adam Marshall, British Chamber of Commerce executive director of policy and external affairs, believes the proposals could play a key role in reestablishing trust. However, he stresses that this must be based on policed and enforced rules. Only this way will businesses and consumers be able to see the benefits over the coming years.

Work is already underway to establish the Council and it is hoped that it will be operational by the end of the year.

When operational, it will require participating banks and building societies to commit to a programme of continuous improvement.

Performance will be reported back on annually and standards of best practice will be established. This will include identifying areas where voluntary standards would help the public interest.

Once a year participants will have a meeting with non-executive directors, or, failing that, risk or reputation committee chairs of the larger banks and building societies to discuss the institution's progress over the year and how this compares to its contemporaries.

What's more, banks will work with the industry and its stakeholders to develop a single principles-based code of practice in alignment with the high-level principles now being considered by the regulators.

The Council will help banks meet obligations placed on them by legislation too, such as the Certified Person's regime, in addition to working with professional bodies already in the banking industry to increase the value of qualifications.

By Victoria McDonnell

Get in touch

Please select your type of enquiry:

Brookson on Twitter