"There exists nowhere within the regulatory structure the equivalent of our courts - a place where market participants can go to resolve ambiguities in regulation "
The All-Party Parliamentary Group on Fair Business Banking has written a letter to the chief executives of all UK banks that offer commercial lending, asking them to support its proposals for a Financial Services Tribunal.
The 2018 Budget discussed recommendations for an alternative dispute resolution for SMEs outside the FOS remit.
Despite FCA plans to extend access to FOS to around 210,000 additional SMEs, the APPG believes SMEs still fall into a gap between the courts and the current Ombudsman Service and are "denied access to justice when claiming against banks".
Simon Walker, former director general of the Institute of Directors, issued a report which suggested FOS operate a new 'super ombudsman' service for SMEs which would award up to £600,000.
The APPG says the report represents "a major step forward" for access to justice for SMEs, but that a £600,000 limit would still leave 59% of historical complaints unresolved.
In the letter, Kevin Hollinrake, co-chair of the APPG, said it would be "reckless and dangerous" to ignore the gap, and that it is the "responsibility of industry leaders, regulators, parliamentarians and government to show leadership and foresight" on the issue.
The APPG supports the view of the FCA and TSC which see a role for a Financial Services Tribunal alongside the ombudsman.
Hollinrake noted that a tribunal would have jurisdiction to hear applications from not only complainants, but from the banks themselves, as it would produce case law providing "different interpretations of the regulations with which banks must comply".
He said banks also suffer from a gap in dispute resolution, as the "financial sector today is governed more by regulation than legislation".
Hollinrake said: "There exists nowhere within the regulatory structure the equivalent of our courts - a place where market participants can go to resolve ambiguities in regulation or uncertainty as to what regulations mean to the daily business of banks. A tribunal would be a new element of the regulatory structure which can provide that regulatory clarity."
The APPG also believes that the tribunal would cut industry costs and increase profits by clarifying regulation that is currently 'unclear'.
It also believes the tribunal could increase SME confidence to take on bank debt and increase demand for lending.
The Group is offering to meet with banking CEOs to discuss the matter ahead of next month's deadline for proposals on the future of SME disputes.