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Small businesses are calling on the Competition Commission to abandon plans to lift price controls on banking services offered by the big banks. They say the banks have failed to honour an agreement made with the competition regulator in return for the controls being lifted.

Under the deal the main banks – HSBC, Barclays, Royal Bank of Scotland and Lloyds TSB – agreed to offer small businesses an account that pays interest on credit balances or to provide free banking – or both.

The banks promised to advertise these benefits to their customers, but a survey of more than 4,000 firms by the Federation of Small Businesses claims that over 70 per cent of companies are unaware of the banks’ undertakings and most have not been offered either the free-banking or interest-paying option.

The Competition Commission has been consulting on the deal itself and the federation has told the watchdog to reverse its plans. Its financial affairs chairman, Mike Cherry, said: “Our members feel that they have been badly let down - not only by their banks but also by the Competition Commission.

“It is very worrying that small businesses now face the real prospect of their banking services deteriorating further. The Commission should keep the price controls in place with a review in 2010.”