Go-between needed to reconnect banks and business, says FSB

Small businesses need a go-between to help rebuild ailing relationships with the banks and revive the flagging economy, latest figures from the Federation of Small Businesses (FSB) show.

More than 70 per cent of FSB members responding to a poll in the run-up to the Budget on April 22 said they thought a corporate mediator would help to build better relations between banks and small businesses. The corporate mediator would act as an independent go-between, brokering agreement on decisions which are currently at a stalemate, including bank lending to small firms.

FSB research shows that around a third of small businesses consider their bank to be less helpful than before the downturn. A further 60 per cent say there has been no change in the banks’ attitudes to providing finance in the form of loans and overdrafts, despite the difficult economic period.

While more than half of small firms prefer to communicate in person with their bank, rather than by letter, online or over the phone, many have seen their relationship with their local branch manager deteriorate over the past few years.

The FSB is calling for the Government to put in place a corporate mediator to resolve these problems, represent both sides in disputes and discussions and de-politicise the issue of bank lending. The FSB believes this would re-establish trust between banks and businesses during the recession and guide the economy into recovery.

The mediator, which the FSB suggests could operate through the Regional Development Agencies, could perform the following tasks:

– Act as a point of contact for entrepreneurs and small firms having trouble getting loans or overdrafts

– Facilitate discussion between business and banks

– Mediate in cases where viable businesses cannot get finance

– Report regularly to the Government, identifying trends and offering solutions

John Wright, Federation of Small Businesses National Chairman said:

“It is high time the Government took some serious action and built bridges between the banks and the small businesses which keep our economy moving. The future health of our economy depends on mending the relationship between small business and the banks; small firms and entrepreneurs need confidence to take the risks to innovate, grow and create jobs and take us out of the recession. In order to do this, they need to regain their faith in the banking system. Small businesses have identified a corporate mediator, one which works similarly to those in France and Belgium, as key to this revival.”

Ends

Notes to Editors

1. The FSB is the UK’s leading business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk

2. For more information on the FSB’s proposal for a corporate mediator, visit the FSB website http://www.fsb.org.uk/documents/corporatemediator/.

3. The role of corporate mediators in other countries:

France:

www.mediateurducredit.fr A Credit Mediator was established in October 2008 by the French President to ensure banks continue lending to companies during the current financial crisis. As of January 2009 the Mediator had received 4, 439 complaints from small businesses and out of the 1,869 cases already dealt with, the success rate was 64 per cent. 95 per cent of businesses seeking help employed fewer than 50 people. As the French mediation service is on a much larger scale than the Belgian system, the initial start up costs will have been high. As well as the Credit Mediator there are seven sectoral mediators, 105 mediators working at a department level and a further group of financial analysts (number not specified). The Credit Mediation Department also employs secretarial staff and press officers. The Credit Mediation Department is a branch of the French Treasury. Working alongside the professional staff are business organisations, chambers and trade unions that feed information about the service back to their members and to encourage them to use the service.

Belgium:

www.kredietbemiddelaar.be/eCache/SEC/1/563.bGlkPUVO.html In Belgium the Corporate Mediator is entrusted to the Knowledge Centre for Belgian SME Financing. It is enshrined within the framework of the Federal Plan for SMEs and within the Federal Government’s economic revival programme. It is a mediation service that is accessible to any company, company head, craftsman, shopkeeper, professional person or individual entrepreneur encountering difficulties with banks in solving his, her or its financing problems In order to contact the Mediator directly businesses need to complete a form on line, this acts as a filter so that only genuine SMEs with problems are helped and time is not wasted. Other more general enquiries can be made by phone or e-mail. In order for the service to work, the Mediator requires a huge amount of information to be supplied by the SME so that it can be fully aware of the situation.

Contacts

Stephen Alambritis: 020 7592 8112/07788422155
Sophie Kummer: 020 7592 8128/07917628998
Prue Watson: 020 7592 8121/07825125695
Marc Shoffman: 020 7592 8113/07595067068