How to claim against TSB

published 4 May 2018

894-sorry-634 — "Sorry" isn't enough: consider legal action

If you've been hit by the bank's failures, make sure you take action.

While TSB has promised to do the right thing for all its customers following a disastrous IT upgrade that has left many locked out of online services, it is not yet clear what that means for small businesses.

At first sight, TSB's pledge couldn't be clearer. "No TSB customer will be left out of pocket as a result of these issues," it says of the scandal. TSB has already said it will waive all overdraft fees and interest charges incurred in April by any customer, including small businesses.

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But many small businesses are complaining about additional costs. Not least, staff may have spent considerable time trying to resolve the problems caused by TSB's failures. Many business owners complain that they haven't been able to pay salaries or settle bills from suppliers because of the outages. In the worst cases, moreover, small-business owners claim they have lost out on valuable new business opportunities because TSB's problems have paralysed their operations.

Small-business owners should seek redress for these additional costs if TSB does not volunteer to pay up. Initially, you will need to make a formal complaint to TSB itself, but consider taking legal action against the bank if it does not offer you compensation that you regard sufficient. Some small businesses will be able to use the Financial Ombudsman Service to make their complaints. Its resolution service is already open to businesses with fewer than ten employees and revenues of less than £2m.Plans to extend this system to firms with up to 50 staff and sales of up to £6.5m are due to come into force later this year, and may help more small businesses challenge TSB.

If you're not covered by the Ombudsman, you may need to take your case to the small-claims track of the county court, which will consider disputes worth up to £10,000, or even the full county court if you're claiming compensation of more than this amount. Whichever route you take, keep careful records of all your losses and costs, including the time you and your staff have spent trying to resolve problems caused by TSB's failures the Financial Ombudsman has the power to order companies to compensate customers for their time, as well as to put right financial losses.

It's also worth talking to creditors about the problems. In particular, HM Revenue & Customs has already said publicly that it will take a sympathetic view in cases where businesses settle bills such as VAT late because of TSB's failures. And if a creditor does attempt to charge you interest or penalties for a late payment, add these to your claim against TSB.

Ultimately, small businesses will need to think hard about whether or not to remain with TSB. The bank regards itself as a challenger to the big high-street names and has launched several initiatives aimed at attracting new small-business customers, but existing customers may now have lost confidence in its ability to provide the service they require.

RBS under fire for branch closures

Royal Bank of Scotland (RBS), the bank at the centre of a scandal over the treatment of 6,000 struggling small businesses, is under fire again as it goes ahead with plans to close 180 branches across the UK.

The bank last week announced that it made a profit of £792m during the first three months of the year, three times as much as in the same period of 2017. But it faced criticism from the Federation of Small Businesses (FSB), which warned that small companies would be hit disproportionately hard by the withdrawal of high-street banking facilities.

The bank, which is 71%-owned by the taxpayer following a bailout ten years ago, has a responsibility to protect its more vulnerable customers, particularly now its profitability is improving, says Mike Cherry, the FSB's national chairman. "Local businesses rely on local bank branches, as do their customers," says Cherry. "When a bank branch closes it makes accessing cash that much harder. Less cash flow in a local economy means less growth."

The criticism of RBS comes as the bank continues to investigate complaints that its Global Restructuring Group mistreated thousands of struggling small businesses in the wake of the financial crisis. The City regulator, the Financial Conduct Authority, is also currently looking into the scandal.

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.