Bank communication topped list of complaints to BBRS

In its latest report that covers issues arising until the end of July 2022, the BBRS said it had received 837 cases, of which around 60 per cent fell into the historical scheme time span and 20 per cent into the contemporary scheme time span.

The report revealed that a core theme that emerged was that communication with and from banks was not clear.

Sally Berlin, chief adjudicator for the BBRS, said the features of SMEs, and the individuals who own them, are infinitely varied.

“Often, however, SME owners will not have a full understanding of the implications of the distinction in banking between personal and business customers,” she said.

“BBRS case numbers are relatively low, as the majority of SMEs are able to find support from the Financial Ombudsman Service.”

The issue over clarity of communication was one of the major concerns for small businesses and, according to the report, impacts all of the other issues raised by customers.

“Bank communications need to address the various legal requirements, but increased focus on making the core communication practical, useful and easily understandable, from the customer’s point-of-view would aid clarity and help to avoid misunderstandings,” the report recommended.

BBRS customers also raised the issue of effective engagement with what matters to the customer including handling of customer complaints.

“Sometimes, the real issue bothering the customer is perfectly plain on the surface, but not always, especially when multiple matters are raised,” the BBRS stated.

It recommended that banks should consider whether there’s any evidence in what the customer has said, to indicate a deeper or slightly tangential issue behind the customer’s complaint/representations and that the bank should then address that.

Customers were also concerned with personal guarantees and the need for banks to provide clarity around the potential long-lasting impact of providing a personal guarantee.

The BBRS said there needed to be clearer communication on the distinction between the responsibilities of the business and the individual’s responsibilities as personal guarantor. With the rise in scams and fraud cases, the report found that fraud prevention and clarity over who does what when it happens was also a consideration for customers.

In regard to bank products, loans were one of the most complained about with BBRS receiving 101 complaints concerning various types of loans.

The types of loans complained of include fixed-rate loans (13 cases), Interest Rate Hedging Products (IRHP) (20 cases), and Enterprise Finance Guarantee lending (EFG) (14 cases).

Once again, customers complained about varied issues that include concerns about lack of clarity around how the loan would work stating the language used in loan documentation being difficult to understand.

There were also complaints about customers being given the wrong advice or the loan being missold as well as breach of contract.

The BBRS said it also received 17 cases about the valuation of an SME’s property, which the SME believes was undervalued by the bank-appointed surveyor.

The BBRS said customers generally believe the undervaluation of assets led to them being refused additional lending and many hold the belief that the refusal of additional lending caused their business to fail.

Complaints about the valuation of property are closely linked to complaints about personal guarantees. Customers feel the sale of any assets undervalued meant their debt was only partially repaid and this led to their personal guarantee being called upon.

Ten of the 17 SMEs raising complaints about the undervaluation of property were from the property development industry, which suggests this sector was disproportionately impacted by lending that was agreed in tranches as is common for this sector. In most cases, the act or omission complained of took place between 2002 and 2020.