Small businesses are being urged to shop around for the best banking deals after the recent Competition Commission decision to lift price controls that established a minimum quality of service from the big four banks.
The Forum of Private Business said it did not support the idea of imposing restrictions on the four largest banks but urged small companies to look into the possibility of switching bank or negotiate with their current provider for a better deal.
“It’s inconsistent for business groups that campaign against regulation and believe in competition to support price controls,” said Matt Hardman, FPB campaigns manager.
“Our aim is to make competition work and encourage smaller businesses to negotiate with their banks, shop around for the best service, and change banks if they are not satisfied.”
But The Federation of Small Businesses condemned the decision to overhaul undertakings made with Barclays, Lloyds TSB, HSBC and the Royal Bank of Scotland in 2002, under which banks pledged to pay interest on accounts in credit or provide free banking to small business clients.
“We are utterly bewildered by the Competition Commission’s provisional decision in this case,” said Mike Cherry, FSB financial affairs chairman. “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,” he added. “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.”
A FPB report published last year revealed a general improvement in the banking industry’s services for small businesses as well as a greater willingness on the part of small firms to switch providers.
