Small business banking in North 'still not good enough'

The Federation of Small Businesses (FSB) today released the findings of its review of small business banking in the North.

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 report found that although the majority of small businesses (70%) are satisfied with their bank, small businesses are not satisfied in the areas of switching accounts, overcharging and customer service.

The study also found that 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.

“Banking services for small businesses have improved over the last few years,” said FSB policy chairman Wilfred Mitchell.

“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, nationally were making £2bn (€2.95bn) 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.

“Given that Northern Ireland has only four main banks, we need to see much greater competition and choice for our members and hope that our report will be closely studied by them and policy makers who want to know the views of small business owners on this issue.”

The FSB’s report, which surveyed more than 4,000 small firms in the North and across the UK, 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).

According to the FSB, small businesses make up 98% of all business in the North.