Lockdown makes case for stronger SME protections

SME businesses were more likely than their smaller counterparts to have had an energy or telecoms complaint that they needed help with during lockdown, new research has revealed.

Ombudsman Services, which handles complaints in both the energy and telecoms sectors, says the findings from its survey make the case for stronger protections, arguing that giving SMEs with unresolved complaints access to redress will boost the post-Covid recovery by helping them to survive.

Under current rules the service is only allowed to investigate complaints made by individual consumers and microbusinesses with fewer than 10 employees.

The survey of more than 1,000 small businesses found that the larger the company, the more likely it is to want to take an energy or telecoms complaint to a third party for redress.

For example, the proportion that would seek third-party resolution of a complaint rises from 36 per cent for companies with the lowest annual turnover to 54 per cent amongst those in the highest turnover bracket of more than £250,000.

Larger businesses were also more likely to have had an energy or telecoms complaint that they needed help with during the UK-wide lockdown in the spring – and more likely to complain.

The larger the business, the more likely it was that one of its lockdown complaints related to energy or telecoms as opposed to other sectors.

Matthew Vickers, chief executive at Ombudsman Services, said: “We’re having to tell larger businesses that we simply can’t help them because of the rules that govern us. This has always been frustrating for both us and the business involved, but especially so given the pressures that SMEs are facing due to Covid-19 and the lockdown.

“A disputed energy or phone bill could be the difference between an SME failing and surviving. We want to be able to help these companies – they are the lifeblood of the economy and it’s vital that they have somewhere to go when things go wrong with important services like energy and telecoms.

“Last year’s changes in financial services gave an additional 210,000 SMEs access to independent dispute resolution in that sector, so it’s reasonable to assume that the same number are currently being denied access in energy and telecoms.”

Meanwhile Federation of Small Businesses (FSB) national chairman Mike Cherry said: “The cap on firm sizes that can access Ombudsman Services appears increasingly arbitrary, preventing small firms just out of scope from accessing much-needed support.

“Small firms that have a dispute with their energy or telecoms provider shouldn’t have to seek costly legal advice and spend time pursuing justice through the courts when the mechanisms to support them exist.”

Utility Week recently published an interview with Matthew Vickers which you can read here.