Small firms accuse big banks of 'dragging their feet'

The Federation of Small Businesses have expressed disappointment at the Office of Fair Trading's decision to back a call from the banks for a six-month delay in the requirement on the banks to pay interest on business current accounts.

The Competition Commission published its report into small business banking as far back as March 14, 2002. Amongst its findings was a requirement for banks to pay interest on business accounts in credit and offer free banking to small businesses. The Chancellor of the Exchequer accepted the findings in full and added that the big four banks were required to give an undertaking to abide by the rules within six months.

Reports this week suggested that the four main high street banks could not comply with the demands on them to pay interest on small business accounts for at least another six months.

Commenting on the decision, Wilfred Mitchell, FSB NI Policy Chairman said: "After an initial flurry of activity we have seen very little evidence of any progress at the main retail banks and we are worried that the whole process is coming off the rails.

"The big four banks have huge resources at their disposal and we are disappointed that the resources have been directed towards opposing the findings of the Competition Commission Report, rather than carrying out its recommendations. This is a snub to the Competition Commission and the OFT."

Mr Mitchell added that small businesses now held more on deposit with the banks than they owed in loans.

He said if there were genuine reasons why there needed to be complex changes to banking systems before the banks could act, the least they could do was pay the interest retrospectively.

(MB)