Reported on Fri, 27 Jan 2006

High street banks have come under fire for their treatment of small and medium-sized enterprises (SMEs).

The Office of Fair Trading (OFT) has said that it is to follow up promises made last year by major banks that they would review their SME policies.

The banks were put under pressure to change their policies in a 2002 Competition Commission report, which alleged that banks had made "excessive" profits of over £700 million from SME customers between 1998 and 2002.

Recent research by Money Facts revealed that the business loans practices of high street banks were still unfair, with SMEs paying charges higher than they did in 2002.

Angela Silberberg, deputy policy manager for the Federation of Small Businesses, said that more needed to be done to stop the long-term "disappointing" service to small businesses from continuing.

"We feel that they [the banks] can do more to protect business customers by ending branch closures and promoting inter-bank agreements, which allow customers to use branches where they do not have an account," she said.

The OFT is now proposing to hold a consultation period of nine months, reporting its finding to the Competition Commission at the end of 2006.

With high street banks and their business loan policies increasingly under the spotlight, firms are advised to seek alternative providers to obtain a small business loan.

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