It costs £ 23 million to set up a banking service for small businesses

Originally written by Timothy Adler about Small Business

The Business Banking Resolution Service (BBRS), the voluntary ombudsman set up to handle bank disputes between small businesses and banks, cost £ 23 million.

Seven banks shared the £ 23 million set-up costs of the Bank Dispute Service between them, so no taxpayers’ money was involved.

However, BBRS has not yet paid damages to small businesses as its establishment was delayed from November to mid-February.

> See also: The Business Banking Resolution Service opens its doors in November

The BBRS hopes to resolve its initial disputes between unwarranted small business and bank borrowers by the summer.

Approximately 500 disputes were pre-registered with the BBRS before the start in mid-February. 160 “live” cases are currently being processed and an additional 48 new cases have been registered as of February 14th.

The BBRS was founded after thousands of businesses were damaged by banking scandals. It gives small businesses an independent view of bank disputes. It is financed by seven banks, but is independent of them.

Conservative MP Kevin Hollinrake, co-chair of the all-party group for fair business banking, described the set-up costs for The Times as “tearful”.

For example, according to the newspaper, £ 9.2 million was spent on “third party delivery costs” to get the dispute settlement service up and running. The auditing company EY is said to have been the main beneficiary.

Legal costs were £ 5.7 million while outsourced PR processing cost more than £ 500,000

Approximately £ 3.3 million has been spent on “integrating” the Effective Dispute Resolution Charity Center, which will handle the daily dispute resolution process.

Total staff costs over the 18 month billing period were £ 3.1m with an average of 14 employees, which translates into an average salary of over £ 220,000 per person.

Alexandra Marks, a high court judge who is the highest paid director, received £ 505,000 for 18 months of work. By comparison, the Prime Minister receives less than £ 200,000 a year.

Explaining what appeared to be a very high set-up cost, the BBRS indicated that its bank dispute resolution service is unique and needs to be built from scratch, which involves a complex seven-way agreement between banks.

She urged small businesses to come forward and use their service.

The BBRS told SmallBusiness, “We are only just getting started. We want small businesses to register with the system when we start processing applications. And the earlier people register, the better. We urge those who are entitled to compensation take advantage of it. “

Craig Beaumont, chief foreign affairs officer for the Federation of Small Businesses, told the Times, “Small businesses that appeal will look at those big sums and expect big results.”

However, Kevin Hollinrake MP pointed out that the £ 23 million will be well spent if the BBRS meets its demand for justice and fair compensation of potentially hundreds of millions of pounds for businesses and individuals.

Last week the BBRS announced that CEO Samantha Barrass is stepping down to be replaced by Interim CEO Mark Grimshaw, former CEO of the Rural Payments Agency.

further reading

What do SMEs think is the best commercial bank account? – poll

It costs £ 23 million to set up a banking service for small businesses

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