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<p>Business lending is not, and never has been, within the scope of the Financial
Conduct Authority’s (FCA) conduct rules. The position that has traditionally been
taken in the UK is that the terms and conditions of contracts between businesses (e.g.
loans) are not generally prescribed by government. The government is committed to
regulating only where there is a clear case for doing so, in order to avoid putting
additional costs on lenders that would ultimately lead to higher costs for businesses
customer.</p><p> </p><p> </p><p> </p><p>However, the smaller end of the business community
does receive regulatory protection. In the UK, loans to the smallest businesses (sole
traders, partnerships consisting of 2 or 3 partners and unincorporated businesses)
of less than £25,000 are treated as regulated consumer credit agreements (CCAs).</p><p>
</p><p> </p><p> </p><p>This protects consumers, typically in their dealings with banks
where there is the potential for consumer detriment. Around three quarters of the
4.8 million UK SMEs are sole traders, partnerships consisting of 2 or 3 partners and
unincorporated businesses.</p><p> </p><p> </p><p> </p><p>For those loans which are
not treated as CCA loans, there is also a clear route of recourse for businesses that
feel they have been mis-sold a business loan to pursue. A business’ first recourse
should be to its bank’s customer complaints department. This is a route that has been
taken by a number of customers. The FCA’s rules require the banks to properly investigate
all complaints and, through ongoing supervision, it continues to monitor the banks’
complaint handling process.</p><p> </p><p> </p><p> </p><p>Furthermore, micro businesses
with a turnover of less than 2 million Euros and fewer than 10 employees have recourse
to the Financial Ombudsman Service (FOS). The FOS is an independent, non-governmental
body, established under statute to provide for the proportionate, prompt and informal
resolution of complaints against financial services firms. It provides a free, independent
dispute resolution service for bank customers and has a special team looking at this
issue. Its decisions are binding on the firm concerned.</p><p> </p><p> </p><p> </p><p>Beyond
this, businesses are expected to be responsible for ensuring that contracts they make
with other businesses are in their interest. However, if a business believes a bank
has acted unlawfully, they can seek to take action through the courts</p><p> </p>
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