The alternative dispute resolution service is being set up later this year by seven major banks and small business representatives to resolve claims from businesses who say they were mistreated by the banking industry.

The SME Alliance, made up of small- and medium-sized companies in dispute with the banks, has written to Chancellor Sajid Javid to request “tangible support” from the Treasury, The Times reports.

Taxpayer-owned RBS is set to pay £1.7bn in dividends to its shareholders, including £1bn to the Treasury.

The SME Alliance proposal has reportedly won support from the influential Democratic Unionist Party (DUP) and the Liberal Democrats.

Chuka Umunna, Lib Dem spokesperson for the Treasury, told The Times: “Small businesses have over the past decade or so have been at the rough end of some totally unacceptable practices by the banking sector, and government was too slow to respond, particularly following the credit crunch.

“This can help to undo some of the damage and is an excellent idea which has our full support.”