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Strategic Finance

SME fury after banks are 'let off'

Thursday, 23 August 2007

The Federation of Small Businesses (FSB) has reacted angrily to a provisional decision by the Competition Commission to lift price controls on the four main business banks. The FSB said there was strong evidence that banks are not complying with undertakings they signed up to in 2002. Under a deal reached with the competition authorities, the main business banks (Barclays, HSBC, Lloyds TSB and the Royal Bank of Scotland Group) agreed to offer small businesses an account that pays interest on credit balances of at least 2.5 percentage points below the base rate or provide free banking or both. In addition they promised to advertise these benefits to their customers.

But an FSB survey of over 4,000 small businesses revealed that over 70 per cent of them were not aware of the undertakings and more than half had not been offered either option.

Mike Cherry, FSB Financial Affairs Chairman, said: “We are utterly bewildered by the Competition Commission’s provisional decision in this case. It flies in the face of all the evidence we have given and completely contradicts the experience of thousands of our members."

“Despite their promises to the contrary, there has been a worrying lack of transparency from the banks about the services they offer to small businesses."

“We have provided concrete evidence that the big four banks are not complying with the undertakings they signed up to in 2002 and the Competition Commission appears to have completely ignored it.”