Most small businesses are satisfied with their banks, but when service goes wrong it goes badly wrong, concludes a review of banking for these companies. But the survey by the Federation of Small Businesses found banks are not fulfilling their commitment to the Competition Commission in 2002.

An official review of business banking was completed in 2000 by Don Cruickshank, a former telecoms regulator and chairman of the London Stock Exchange. It was followed by a referral by the Office of Fair Trading to the Competition Commission and in 2002 banks gave a commitment to pay at least 2.5 per cent interest on business current accounts or offer free banking. They also agreed to publicise their services to customers.

The Federation of Small Business surveyed 4,000 small firms on progress since those reports and, despite finding that 70 per cent are satisfied with their banks, the commitment to the competition regulator is not being met.

FSB financial-affairs chairman Mike Cherry, says: “Banking services for small businesses have improved over the past four years. However, there is a long way to go before small businesses get the quality of service from their banks that they need and deserve. There has to be a cultural change within the banks so that they understand the needs of their customers and can then deliver even better services.”

Cherry was speaking after the banks announced record profit figures in 2007. “The current profit levels of the banks demonstrate they have the capability to do this,” he says. “The Competition Commission found major banks were making £2bn a year in profits from small-business banking. We call on banks to live up to their undertakings or, if they fail to do so, for the regulators to make them.”

The main causes of small companies' complaints are switching accounts, overcharging and poor customer services. The review suggests a major cause is bank staff’s lack of understanding of small business.

Read the Cruickshank Review at www.hm-treasury.gov.uk/documents
Visit www.competition-commission.org.uk and www.fsb.org.uk for more information 

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