Legal experts call for financial services tribunal

A FINANCIAL services tribunal could boost the City’s competitiveness by providing a body of consistent case law and a route for firms to seek justice, experts told City AM.

Speaking to City A.M., Richard Samuel, barrister at 3 Hare Court Chambers, said “London’s common law dispute resolution system is a key part of what makes it competitive for financial firms”.

He argued that regulators have increasingly been given extensive powers to impose rules without corresponding checks or balances. Since Brexit, this trend has only accelerated after powers previously held at an EU-wide level were passed to the UK’s financial regulators.

This potentially poses problems for the financial sector, Samuel argued, because regulation is “inherently less predictable as it establishes broad obligations such as ‘fairness’”.

“Worse, no judges have the power to write any reasoned judgments which clarify their regulations,” he continued.

To temper the extensive regulatory powers, Samuel suggested that a financial services tribunal – modelled on tribunals in other sectors – should be introduced to help resolve disputes and establish clear case law.

“As the costs of compliance with regulations continue to increase, London needs to reap the competitive advantage of its common law dispute system by putting future regulatory disputes into a Financial Services Tribunal,” he said.

He argued a tribunal would also ensure firms had access to a reliable dispute resolution system in place of the ad hoc redress schemes established in response to various banking scandals since 2008. This problem is particularly acute for SMEs, which rarely have enough funds to pursue dispute in the courts and cases often too big and complex for the Financial Ombudsman Service.

William Wragg, co-chair of the APPG on Fair Business Banking, said a tribunal could “correct the power imbalance inherent in disputes between businesses and large financial institutions”.

While the Business Banking Resolution Service was established in 2019 to resolve many of the more complex disputes, Wragg said it was “a painfully inefficient” exercise. “It has become clear that voluntaryschemes do not work,” he said.