The Federation of Small Businesses (FSB) today released the findings of its review of small business banking. The FSB's report, which surveyed over four thousand small firms, looked at progress made since the Cruickshank Review of 2000 and the recommendations of the Competition Commission Inquiry of 2002 following a referral of the banks to the Commission by the Office of Fair Trading (OFT).
The report's findings follow on from the recent announcement of record profits by the major banks and allegations of poor customer service for personal account users.
The three main strands of the report's findings were:
1. The majority of small businesses (70%) are satisfied with their bank (page 5);
2. But when the service goes wrong it goes badly wrong. Switching accounts, overcharging and poor customer services are the main areas where small businesses are not satisfied. A major cause of this is the lack of understanding of small businesses by bank staff (page 15); and
3. The banks are not fulfilling their commitment to the Competition Commission to offer free banking or pay at least 2.5% interest on business current accounts and to publicise these services to their customers (page 10).
Small businesses employ fifty eight per cent of the private sector workforce, contributing fifty per cent of UK GDP, and their success is a vital part of the economic well-being of the country. It is in the interests of the whole of the UK to ensure that they can succeed and they need affordable, reliable banking services to do so.
Mike Cherry, FSB Financial Affairs Chairman, said:
"Banking services for small businesses have improved over the last few 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 culture change within the banks so that they understand the needs of their small business customers and can then deliver even better services for them. The current profit levels of the banks demonstrate that they have the capability to do this.
"The Competition Commission found that the major banks were making £2 billion per year in profits from small business banking. We call on the banks to live up to their undertakings to the Competition Commission or, if they fail to do so, for the regulators to make them."
Notes to Editors:
1. The FSB's Banking report can be found at http://www.fsb.org.uk/documentstore/filedetails.asp?id=377
2. The Cruickshank Review can be found at www.hm-treasury.gov.uk/documents/financial_services/banking/bankreview/fin_bank_reviewfinal.cfm
3. The Competition Commission report into small business banking can be found at www.competition-commission.org.uk/rep_pub/reports/2002/462banks.htm#full
4. The FSB is Britain's biggest business organisation with over 200,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.