The future of the Business Banking Resolution Service (BBRS)

Our series on the Business Banking Resolution Service ("BBRS" / "Service") has looked at why it was established, how it works and compared it to other dispute resolution procedures.

In our first article we explained that the BBRS' roots go back to the fallout of the 2008 global financial crisis and to the recommendations of Simon Walker's review into the complaints and Alternative Dispute Resolution ("ADR") landscape for the UK's Small and Medium Enterprise ("SME") market. Consequently, a key objective of the BBRS is to rebuild confidence between banks and their SME customers. One only has to look to the recent media coverage to see that there is mounting pressure for the BBRS to deliver on the costs of its establishment and all stakeholders will be watching its progress intently.

We recently had the pleasure of discussing the BBRS with Alexandra Marks, its Chief Adjudicator, who endorsed the BBRS' unique formula: neutrality, independence and equality of arms, in a "fair and reasonable'' jurisdiction - with the ability to reach creative solutions through various ADR techniques.

Whilst participation and quality of outcomes will ultimately be the overall measure of success for the BBRS, it is a brand-new scheme that, for the first time, offers many of the UK's SME banking customers a forum for resolving their banking disputes (based on a 'fair and reasonable jurisdiction'), without the barriers/risks associated with formal litigation.

In this final article we will consider its role in the future landscape of banking disputes.

Key areas

These are the key areas that we suggest stakeholders need to be mindful of:

Eligibility

Eligibility was one of the main sources of contention during the establishment of the Service and so it is unsurprising that commentators have already identified a number of areas which would benefit from early determination/clarification.

For instance, as highlighted by Stephen Kosmin of 11KBW Chambers in his recent webinar introducing the BBRS, the Service is unable to determine complaints which have already been subject to "Relevant Litigation". "Relevant Litigation" is defined in the Scheme Rules Glossary as: legal proceedings of any kind, including, but not limited to "the issue of pre-action correspondence". However, no further guidance is given in the Scheme Rules, so it is unclear whether a strict approach will be taken, or whether banks will be asked to agree to eligibility for complainants who have engaged in any form of pre-action correspondence. Clearly, a strict approach has the potential to significantly impact SME's ability to access the Service.

Naturally, it is a balancing act between pragmatism and consistency/certainty of the rules. The Chief Adjudicator was keen to stress that with its ground breaking concessionary cases, the Scheme does not have hard boundaries and encourages banks to recognise the benefits that would be gained through having a structured forum for dispute resolution – as opposed to unstructured, costly, satellite disputes as to eligibility which still leave an underlying dispute unresolved.

The Chief Adjudicator recognised that SME groups have expressed concern that this approach was an opportunity for the banks to have a 'veto' on concessionary cases. However, she stressed that the banks do have to act reasonably and in good faith when considering the BBRS' request to deal with such a case (i.e. they have to provide good reasons for any refusal) and, in her experience so far, banks have been willing to agree the inclusion of concessionary cases where it is appropriate on the individual facts of the case.

Determinations

The Scheme Rules specifically state that the BBRS' determinations do not set binding precedents, so one may question how consistency and predictability can be achieved. However, the Chief Adjudicator emphasised that the Scheme will strive for consistency, but each case is considered on its own terms through the process of investigative adjudication or resolution along the way.

Like the FOS, the BBRS will share its determinations, but its way of doing so will be unique. The Chief Adjudicator explained that the Scheme won't be 'naming and shaming' and instead will produce aggregated case summaries which take lessons from a number of matters with common themes.

When the determinations and case summaries start to filter through, there are three areas we will be focusing on in particular:

• The BBRS makes determinations on a 'fair and reasonable' basis, so it can depart from a solely legal analysis. We will be watching to see in what circumstances the BBRS sees it fit to do this.
• The Chief Adjudicator emphasised the benefit to the parties of the various ADR techniques used by the BBRS and therefore the freedom to reach much more creative solutions than would be possible if the matter was litigated through the Courts. We look forward to seeing some of these in action.
• The historical and contemporary schemes each have binding award limits ("BAL") on the amounts that the BBRS can require banks to pay to successful complainants. The BBRS can recommend awards above the BALs though; and the relevant bank is required to consider those recommendations reasonably and in good faith. We are interested to see what approach the BBRS will take to awards and, in turn, the participating banks' approach to recommendations above the BAL.

Neutrality and equality of arms

The BBRS has specifically been designed so that parties have a neutral space where they can resolve their disputes without the need to instruct legal representatives or to incur the costs of obtaining their own expert evidence.

The Chief Adjudicator stressed that the BBRS wants to do the right thing by both parties and recognises that it needs to do everything it can to even out any power imbalance. For example, it is not looking for detailed legal submissions from each side and the decision of a complainant to retain solicitors or other professional advisors should be carefully considered (e.g. what do they bring to the matter?).

The Scheme Rules do give the BBRS the power to make costs awards for "reasonable" costs that are "necessarily incurred" and they also provide for the BBRS to obtain expert evidence at its own cost where necessary - although the expectation is that in most cases expert evidence will not be required for complaints to be determined by the BBRS. Therefore, the BBRS does anticipate scenarios where legal support (and expert evidence) may be necessary but the published summaries will prove useful in ascertaining when that is.

One important feature of the BBRS is that each complainant will be allocated a 'Customer Champion'. The Chief Adjudicator likened this to the support that is available through pro-bono schemes to litigants in person in the Courts - not an advocate or McKenzie friend. The Customer Champion will help complainants to gather the relevant information/evidence and notify the bank when to provide their comments and material in response. They will also identify opportunities where more informal dispute resolution methods might be suitable and can suggest potential courses of action (although they cannot offer legal or other advice).

Historically, various 3^rd party professional (e.g. CMC's, debt advisors etc.) have played a big part in the pursuit of banking disputes on behalf of SMEs - often paid from any settlement / award - so whether the Customer Champions will lead to a decline in their engagement over time will be interesting to follow.

Conclusion

In other commercial relationships, parties regularly agree to have some form of dispute resolution clause. For significant contracts, it would be essential. Why should a commercial banking relationship be any different? Here the participant banks have simply agreed a contractually binding dispute resolution mechanism where, in other commercial relationships, it would be common.

Asked what success looked like in a year’s time, the Chief Adjudicator told us that it was the BBRS having delivered enough outcomes giving stakeholders' confidence that it is reaching fair and reasonable resolutions to their disputes.

A full picture of the impact of the BBRS will take time to develop but it offers both customer and bank a powerful tool that could change the landscape for SME/banking disputes.

If you would like to any further information regarding the BBRS or to discuss any of the matters we have raised in the series, please do get into touch.