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Treatment of Small and Medium Enterprises in the FCA Rules

2nd December 2015

The Financial Conduct Authority (FCA) has recently published a Discussion Paper on their approach to Small and Medium Enterprises (SMEs) as users of financial services (DP 15/7).

This discussion paper looks to review the way in which SMEs are treated within the rules of the FCA as users of financial services. In addition, the discussion is partly as a result from the surfacing of evidence that suggests there are a number of issues in the way in which some financial services firms have treated their SME clients.

Comment from the FCA:

“Small businesses are a vital part of the UK economy. We need to consider whether we’re doing our part in delivering an effective, proportionate regulatory framework that gives them the confidence required to use the financial services they need to grow”

Christopher Woolard,

Director of Strategy & Competition, FCA

SME Discussion Topics

At present, only a few SMEs are unable to take complaints to the financial ombudsman. However, those businesses that are unable to do so account for a considerable share of the sector’s demand for financial services, and some of them are likely to be less experienced when dealing with financial products and services despite their larger size.

Thus, the FCA’s Discussion Paper is specifically looking for industry comment from businesses and self-employed individuals about the following:

• Whether the level of protection provided to SMEs it the FCA Handbook is broadly correct;
• Whether the FCA’s rules should treat more SMEs like individuals consumers and extend provisions reserved only for the smallest SMEs to the larger ones;
• How to best promote good practices amongst firms; and
• Whether more ambitious voluntary standards could complement, or provide an alternative to changes to the FCA’s rules.

The regulator would also like those commenting to consider some more specific options that are available to it, specifically, they would like to know whether more SMEs should be eligible to complain to the ombudsman service and be covered by its complaints handling rules. Also, whether some rules applying to firms’ dealings with individual consumers should also apply to SME clients, or cover a larger share of SMEs than they do at present.

The FCA’s deadline for receiving comments upon this Discussion Paper is the 18th March 2016.

Click here to read the full FCA discussion paper: DP15/7: The FCA’s approach to SMEs as users of financial services.

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FCA’s Treatment of SMEs