Government-backed loan schemes in the context of the Covid-19 pandemic
On this page we outline how we can help with complaints about the Government-backed loan schemes set up to help provide financial support to businesses in the context of the Covid-19 pandemic.
What are the Government-backed loan schemes?
In Spring 2020, the Government established various emergency loan schemes for businesses of different sizes, including: the Bounce Back Loan Scheme (BBLS) for small businesses and the Coronavirus Business Interruption Loan Scheme (CBILS) for small and medium-sized businesses. In April 2021, as these schemes closed to new applications, the Government established a new loan scheme: the Recovery Loan Scheme (RLS). You can find more information about these schemes on the British Business Bank’s website.
Types of complaint we see
We have seen complaints relating to loans under the BBLS, CBILS and RLS from companies, sole traders, partnerships and charities.
The complaints brought to us have been about a wide range of issues, including problems with the loan or new account application, how the lender has administered the loan or sought to obtain payments, or how the lender has withdrawn the loan funds or suddenly restricted or closed the account.
What we look at
When we consider a complaint, we want to determine what is fair and reasonable in all the circumstances of the individual complaint.
To help us consider a complaint fairly, we’ll ask you to provide some information. We’ll also gather information from the lender. We’ll make our decision about what happened using evidence provided by you, the financial business and any relevant third parties.
We will take into account all applicable regulations, rules and law, including any industry codes or regulatory guidance.
How to complain
If you believe you’ve been treated unfairly by a lender, you should talk first to the lender so they have the chance to put things right. They need to give you their final response within eight weeks – find out more about time limits affecting your complaint. If you’re unhappy with their response, or if they don’t respond, you can contact us.
Bringing a complaint to us is straightforward and won’t cost you anything. We’ll check your complaint is something we can deal with, and if it is, we’ll investigate.
Find out more about how to complain.
Putting things right
If we decide that a financial business has made a mistake or treated you unfairly and you’ve lost out as a result, we have the power to put things right. Usually, we’ll tell the lender to put you back in the position you would have been in had things not gone wrong.
Find out more about our approach to calculating compensation.
Case studies
Here is a selection of case studies that illustrate the range of ways we investigate and resolve complaints.
-
What happened
A small business making car parts complained that their bank had turned down their application for a "feeder" bank account, leaving them unable to apply for a bounce back loan. The directors were unhappy that the account application appeared to be subject to a credit check, when applications for the bounce back loan weren’t.
What we said
We said that the bank had the discretion to decide the basis on which it would accept new customers. So while bounce back loan applications weren’t subject to a credit check, the bank was entitled to assess the business against its usual criteria to open an account.
We checked that the bank was applying its processes consistently, and we reviewed how it had handled the business’s application. We thought the bank had handled the assessment fairly and could see why it hadn’t met the bank’s criteria. So we didn’t think the bank had acted unfairly and didn’t ask it to do anything more.
-
What happened
A café owner was having issues opening a "feeder" bank account with her bank – she told us she'd been getting mixed messages and making no progress, despite already holding another account with them. She’d raised a complaint but not heard back. The prolonged closure of her café was putting her business at risk.
What we said
We quickly got in touch with the bank and asked them to take another look as we couldn’t see any good reason for the hold-up and could see the urgent need for the loan.
The bank duly sorted the issues and the account was opened a few days later. The café owner got back in touch with us to let us know she’d received the loan and that she thought this would help her business to continue.
-
What happened
A sole trader with a sports training business contacted us after his bank declined his application for a bounce back loan.
What we said
We found that the bank had conducted a credit check on the trainer embedded within its other checks (for example it's Anti-Money Laundering checks). While this was permitted, the bank wasn’t allowed to rely on the results of the credit check when determining whether to lend – but we found that it effectively had.
We spoke to the bank about its approach. This led to the bank changing its stance and agreeing to review the trainer’s application again. The bank then approved the application, and paid the trainer some compensation for the delay.
Our intervention with the bank, early in the roll-out of bounce back loans, caused it to review those applications it had previously declined on similar grounds, and to change its practice when evaluating subsequent applications.
-
What happened
A taxi service complained that, some months after being issued funds under a Bounce Back Loan, its bank suddenly suspended its account and later recalled the loan funds issued. It didn’t think this was fair.
In addition, the complainant was upset with the amount of time it had been without access to its account while the bank had been going through this process.
What we said
We looked into things and considered the evidence available to the bank which had prompted its action. We weren’t able to share this information with the complainant, but we were satisfied that the bank had sufficient reason to take the action it had.
However, we also considered how the bank had conducted its investigation and found that it had taken far longer than was reasonable. We found that the taxi service had been unnecessarily inconvenienced in this period from not having access to its account.
So, while we didn’t say that the bank needed to take any action to restore the funds to its customer, we did say that the bank should pay it an amount to compensate for the inconvenience caused by the unreasonably protracted time its process had taken.
-
What happened
A guest house complained that their request for a payment holiday on their Bounce Back Loan was ignored by their bank, causing payments to begin earlier than they’d planned. This occurred at a time when their cashflow was already struggling due to the continuing effects of the pandemic, causing an unauthorised overdraft.
What we said
We found that the guest house had completed the online form appropriately to request the payment holiday, as allowed under the Pay as You Grow options within the Bounce Back Loan Scheme. However, due to an administrative error by the bank, the application had not been registered in time for the initial repayments to be paused.
The bank had admitted this error and returned the payments that had been taken to its customer and put the payment holiday in place as requested. However, it hadn’t addressed the consequences of the error.
We said this wasn’t fair and required the bank to put the complainant fully into the position they would have been in had the request for a payment holiday been processed properly the first time. This included returning the overdraft fees and interest charged. We also required the bank to compensate the guest house for the inconvenience caused.
-
What happened
A key-cutting sole trader complained that the monthly direct debit taken by the bank to repay a Bounce Back Loan was not the amount he had expected.
What we said
We found that the bank had initially informed the customer that, after the initial 12-month payment holiday and interest-free period, he would be required to repay the capital of the loan at a specified amount per month plus interest. However, the bank didn’t specify what that interest would be. Later, prior to the first direct debit, it mistakenly informed the customer that the amount to be debited would be just the amount it had previously specified for the capital, with no mention of any amount for interest.
We said that the bank should have done more to explain upfront to the customer the amount it would be required to pay, specifying both the capital and initial interest to give the total amount per month. This should have been confirmed in the notice prior to the first direct debit.
We then considered what should be done to put the customer back into the position it would have been in had these steps been taken. We judged that the customer would still have taken the loan, so the outcome was the same. Therefore, we didn’t require the bank to make any change to the loan repayments. However, we did say that the customer had suffered some distress and inconvenience from the bank’s mistakes so required the bank to pay the customer an amount in compensation.
Other useful resources
- Take a look at how to contact us
- You can search our published ombudsman decisions online on our main website.
- Information about the Government-back loan schemes in the context of the Covid-19 pandemic is available from the British Business Bank.
