UK banks respond to the Walker Review

United Kingdom

On Friday 30 November 2018, UK Finance published its response to the Walker Review into the complaints and ADR landscape for the UK’s SME market.

The Walker Review focused on disputes between providers of financial services and SME customers that remain unresolved through existing customer complaints procedures and may be unsuitable for court processes. The Review was commissioned by UK Finance; Simon Walker CBE was appointed as independent chair of the Review; and the findings of the Review were published on 23 October 2018 (see our separate LawNow here). The findings set out three key areas where action could be taken to assist SMEs:

  1. The role of the Financial Ombudsman Service (FOS);

  2. A role for voluntary ombudsman arrangements in providing ADR; and

  3. The need for better monitoring, information and dialogue to rebuild the relationship between banks and SMEs.

Through UK Finance, seven banks operating in this market in the UK[1] (the “Seven Banks”) have responded favourably to the Walker Review. The UK Finance response sets out the Seven Banks’ agreed proposals for implementing the suggestions of the Walker Review:

1. Expansion of the scope and capability of the FOS

  • The Walker Review:

    • The Walker Review supported the FCA’s proposals to expand the scope and mandate of the FOS. Currently, a business must qualify as a “micro-enterprise” in order to be an eligible complainant: it must employ fewer than 10 people and have a turnover and annual balance sheet of €2 million or less. The FCA has confirmed that a new category of “small businesses” will, from 1 April 2019, be eligible complainants: businesses with annual turnover of less than £6.5 million and either employing fewer than 50 people or with a balance sheet total of less than £5 million.

    • The Walker Review was also supportive of the FCA’s proposal to increase the binding award limit of the FOS to £350,000, while retaining the FOS’s ability to recommend payments above this level. (For more information on the FCA’s proposals, please see our LawNow here)

    • In addition to this, the Walker Review also suggested that a specialist ombudsman and complement of staff with business skills and experience is required.

  • The Seven Banks’ response:   

    • The Seven Banks are broadly supportive of all of these proposals. 

    • However, they believe that the employee test should be removed so that SMEs are only required to meet the turnover and balance-sheet tests to qualify as “small businesses”. This would address challenges for SMEs that rely on seasonal and temporary workers and remove most complex holding-company structures from the process.

    • The Seven Banks also acknowledge concerns about the FOS’s current resources to meet the expanded mandate, stating that it is critical that the FOS’s mechanisms are upgraded to meet the expanded remit.

2. A voluntary Ombudsman scheme


    a) for larger SMEs:

  • The Walker Review:       

    • The Walker Review proposed the establishment by UK banks of a voluntary ombudsman scheme to support larger businesses with turnover between £6.5 million and £10 million which will not qualify as “small businesses”. This ombudsman service would have a binding award limit of £600,000.

  • The Seven Banks’ response:

    • The Seven Banks agree with this proposal but believe that the FOS should deliver this scheme through a further expansion of its remit.

    • However, in the short term and due to concerns about the capacity of the FOS to take on a further expanded mandate in addition to the current FCA proposals, the Seven Banks have stated that they are willing to establish an interim voluntary ADR process for this cohort of businesses.

  • The next steps are:

    • The Seven Banks have set a target date of September 2019 to have the temporary system up and running, with input from Government and regulators.

    b) for eligible historic cases:

  • The Walker Review:

    • The Walker Review proposed the establishment of a voluntary Dispute Resolution Service (“DRS”) for historic cases, provided these have not been already dealt with by any court or arbitration body. However, the Walker Review did not propose a mechanism for this.

  • The Seven Banks’ response:

    • The Seven Banks agree with this proposal and, in the UK Finance report, set out a number of criteria for historic cases to be eligible to be addressed through the DRS. In general, the process would be available to business that were not previously eligible to bring their case to the FOS but would be eligible under its proposed expanded scope and whose unresolved dispute arose from an event that occurred on or after 1 January 2008.

    • The UK Finance report also sets out key principles for the operation and establishment of a voluntary DRS, developed in consultation with business groups, the Government and the FCA. These include, amongst other points, “independent leadership and governance” and “legal expertise”.

  • The next steps are:

    • An independent DRS Steering Group will consider further options for the establishment of this system. The Steering Group will be established and commence work in December 2018.

    • The Seven Banks have agreed to support and fund the establishment of the DRS for historic cases by a target date of September 2019.

3. Independent SME Advisory Council

  • The Walker Review:

    • The Walker Review identified the need for better monitoring, information and dialogue to help rebuild the relationship between banks and SMEs.

  • The Seven Banks’ response:

    • In response to this, the Seven Banks propose that an Independent SME Advisory Council be established to identify emerging issues and areas for concern and make recommendations.

    • This Council would be made up of experts and senior representatives from across the research community, relevant business groups and the banking sector.

  • The next steps are:

    • No specific date has been given as a target date for setting up this Council.



The UK Finance response is supportive of the detailed and considered recommendations in the Walker Review. There now appears to be a wide consensus for the expansion of the FOS’ remit in line with the current proposals.


Further, the SME sector will welcome the proposals for an additional route to resolve larger disputes via the interim voluntary ombudsman scheme.


However, it is worthwhile noting that the proposals in the UK Finance response are only expressly agreed by the Seven Banks. The report states that these banks believe that the effectiveness of these proposals would be enhanced by the broadest possible participation, including from non-bank lenders and new providers in the marketplace serving eligible SMEs. Therefore, to what extent these proposals are taken up by others will be important to observe. In particular, if other lenders to SMEs do not join the voluntary ombudsman scheme, SME customers will have to be mindful of the different recourse available to them to resolve their dispute(s).



A copy of the Report can be accessed here


Please contact the authors if you would like to discuss any aspect of this report.

[1] Barclays, CYBG, Danske Bank, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Santander