The FCA review paper is also questioning whether more SMEs should be given access to the Financial Ombudsman Service.
Currently only a small minority of SMEs are unable to take complaints to the ombudsman, however, these businesses account for a substantial share of the sector’s demand for financial services.
Some of them are also likely to be less experienced in dealing with financial products despite their greater size.
Christopher Woolard, director of strategy and competition at the FCA, said: “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.”
In addition to asking whether access should be extended, the FCA is requesting views on whether the amount of compensation the ombudsman can order financial services firms to pay should be increased from its current limit of £150,000.
“We want people to tell us whether our rules are appropriate. Do they strike the right balance between protecting small businesses and encouraging firms to offer services to SMEs, to compete and to innovate,” Woolard said.
The discussion paper has been introduced to deal with a number of issues with the way some financial services firms have treated their SME clients.
The FCA’s own research has found that ‘complex products, limited choice, poorly managed expectations and cognitive and behavioural biases’ may expose SMEs to risk.
It found that when things go wrong, SMEs may experience complex and escalating problems, and may struggle with the complaints and claims processes.
The paper is also a reaction to the provisional findings of the Competition and Markets Authority (CMA) into retail banking.
Those with views or evidence to share following the publication of the discussion paper have been asked to send them to the FCA by 18 March 2016. This can be done via its online response form.
