Banks face grilling over business clients

Banks were accused of operating a complex monopoly

By BBC business reporter, Brian Milligan

Britain's big High Street banks are having a nervous start to the New Year.

Any day now the Department of Trade and Industry is expected to publish a damning Competition Commission report into the way banks treat small businesses.

Two years ago they were accused of operating a complex monopoly.

One internet business is one of thousands which claims to have been mistreated by its bank.

It is a complaint the Competition Commission is expected to tolerate no longer.

Last year, the company's bank agreed to lend it more than £100,000.

But, alarmed by the slowdown in the IT sector, the bank suddenly changed its mind, throwing the business into chaos.

Don Cruickshank reported that the banks were making super-high profits

"I spent my time fire-fighting as opposed to developing more business and I believe that due to this we've lost around £200,000 worth of new developed business," explained Nick Clemson of Starfish Media.

Such treatment is perhaps inevitable when the big four banks control more than 80% of small business accounts.

To an extent, though, competition is beginning to hit their market share.

Furthermore the prospect of a damning report to spur one or two of the banks into action.

You can now bank for free at banks such as the Halifax, for example, providing you are in credit by at least £5,000, but it is still notoriously difficult for businesses to move their accounts from one bank to another.

"Small businesses find it enormously difficult to move from one bank where they may have fallen out in terms of their relationship," said Stephen Alambritis of the Federation of Small Businesses.

"They have a huge headache with direct debits, with standing orders and moving from one account to the other.

"Also the credit referencing system does not lend itself to moving freely from one bank to another."

It is nearly two years now since Don Cruickshank reported that the banks were making super-high profits, and operating a complex monopoly.

The banks themselves argue that much has changed since then, and that charges in particular have fallen.

However, it will be up to the government to have the last word in this extended saga, and the pressure is likely to be on the banks, not the businesses.