"40 per cent of small businesses believed they were being over-charged for their accounts"

A year on since the government ordered the big four banks to start paying interest to small businesses a report has revealed that more than half of those customers remain unaware of their entitlement.

From 1st January 2003 the four main high street banks – Barclays, Lloyds TSB, HSBC, Natwest – were ordered by the Competition Commission to pay interest to small business accounts in credit.

However, a survey by Bank of Scotland has revealed that 57 per cent remained unaware of how much interest they receive from their banks. Only 38 per cent claimed to be more aware of the value of service they received.

The report casts doubt over the impact of the Competition Commission’s rulings, which were supposed to make banking fairer for small firms and create and a competitive banking market.

Another indication that there’s been little improvement in the situation is the additional finding from the survey that 40 per cent of small businesses believed they were being over-charged for their accounts.

However the report also highlighted a growing astuteness among some small business owners, with 17 per cent admitting they were more likely to consider switching banks than a year ago.

Eddie Morrison, managing director of small and medium-sized banking for Bank of Scotland, said: “Small businesses are increasingly and rightly demanding better value and it is encouraging to see an increasing number planning to vote with their feet and move their account.

Moving banks should become even easier in 2004 thanks to another piece of regulation that came into force on 31st December ensuring that the transferral of a business customer’s account and credit details between banks must take no longer than three working days.

The ruling aims to remove the perceived hassle of switching banks, something that in the past has deterred many business owners who feared being left without an account for weeks or even months.

Chris Stamper, head of business for one of the big four’s competitor’s Abbey, said: “Last year’s regulations have gone some way to helping small businesses get a better deal, and this new switching timetable should be a further boost.

“We urge SMEs to take full advantage of this new regulation, taking time to look round for a better deal.”