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EDITIONS
Thursday, 31 October, 2002, 15:53 GMT
UK banks clean up their act
The interior of a bank
Business customers have to wait to switch accounts
Eight of the UK's main banks have agreed to change the way they treat small business customers.

The eight banks

Barclays
HSBC
Lloyds TSB
Royal Bank of Scotland Group, including its subsidiary NatWest
Bank of Scotland
Bank of Ireland
AIB Group
National Australia Bank, including its subsidiaries Clydesdale Bank and Northern Bank
The banks concerned have agreed to the so-called behavioural remedies recommended by the Competition Commission.

The proposals cover a range of issues, including measures to make it easier to switch banks and to increase the transparency of bank charges.

The Chancellor Gordon Brown and small business leaders have welcomed the banks' move.

They believe it will help promote competition in the small business banking sector.

Account switching

Last March the Competition Commission was highly critical of the banks' approach to small business banking.

As a result, the banks have now given an undertaking to Gordon Brown to abide by the Competition Commission's recommendations and to clean up their act.


In the past the relationship with banks has often been very bad

Stephen Alambritis
Federation of Small Businesses

In future, banks will speed up the switching of small business accounts.

The Federation of Small Businesses (FSB) estimates that banks take on average five weeks to arrange an account switch.

According to the FSB, delays in switching are a major barrier to competition.

In addition, small enterprises will be free to change banks without incurring penalties.

High-time

Mr Brown has welcomed the banks' move.

"Once in place, these remedies will help to promote competition in this sector, which will benefit small businesses throughout the UK," he said.

Stephen Alambritis, an FSB spokesman, told BBC News Online that it was "high-time that banks were forced to change their approach to small business.

"This is good news for small business."

Small businesses in the UK have 30bn on deposit at banks but Mr Alambritis said many small business people had often found themselves at odds with their banks.

"In the past the relationship with banks has often been very bad. Hopefully, this agreement will make sure that the relationship does not turn sour if there is downturn," he said.

See also:

14 May 02 | Business
14 Mar 02 | Business
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