The cost of looking for a new bank is likely to equal the money saved by bosses if they find a better deal, according to a shock announcement by a high street bank.
Three years ago a government report showed that major clearing banks were making huge profits by providing less than fair services to small businesses. Banks were estimated to be making an extra £1 billion a year.
The government reacted by enforcing a new code of conduct on banks, forcing them to provide interest on in-credit accounts or free banking or even both. Since then smaller banks have stepped up the fight to snatch a bigger share of the small business market.
However, Alliance & Leicester (A&L), which is outside the 'big four' and is growing in popularity with smaller businesses, says switching accounts might not be as cost-effective as first thought.
An investigation into conditions following the Cruickshank report by A&L, shows that information about bank interest and charges is still hard to come by and that firms risk wasting time through exhaustive searches.
Francis Chittenden, professor of small business finance at Manchester University who compiled the investigation for A&L, calculates that it takes about two working days for bosses to collect and sift through banking offers to get a good impression of the market.
He said: "Valuing business owners' time at a very conservative hourly rate of £40 leads to the conclusion that the cost of conducting this exercise could be £560."
"While the cost savings would often be worthwhile, business owners unfamiliar with the banking market may regard embarking on this as a risky diversion from day-to-day activities."
Steve Jennings, director of business banking at A&L, added: "What the report has found is that the product ranges offered by the bigger banks are both complex and lack transparency, and are confusing customers."
A&L recently won 'best business bank' at the Startups.co.uk awards.