Recommendations on changes to the retail banking industry have been welcomed by the Federation of Small Businesses (FSB), which claims they will help small businesses.
Members at the Federation of Small Businesses (FSB) called for a set of remedies that would demonstrably change consumer behaviour, with increased switching and more competition making high street banks improve.
Structural change was not on the cards in the report published by the Competition and Markets Authority (CMA). However, it does propose changes to make it easier for small businesses to compare banks and switch more easily to get a better banking deal.
Mike Cherry, FSB National Chairman, said: "Today's banking market does not work well for small business. We welcome the package of measures aimed at boosting awareness of the Current Account Switching Service (CASS). Current levels of switching among small firms are far too low, with only 4% of FSB members switching in the last year. Small business owners are still not confident that switching banking products or services will be a risk-free, seamless process, and as a result, many choose not to switch. A new awareness campaign and measures to make switching transparent are promising steps."
The FSB also agreed with the CMA's view that better transparency around prices, charges and availability of lending products will make it easier for small business customer to shop around. The proposals' focus on a new online comparison tool should help businesses feel more confident when trying to find the back that best suits their needs.
Mr Cherry added: “The CMA has tackled some of the more opaque practices of the high street banks. With £1.2bn charged each year for unauthorised overdrafts, proposals for a maximum fee cap and to introduce prompts and alerts for overdrafts at the end of free banking periods will combat a particularly poor practice that small firms face. This should encourage small businesses to shop around and switch.”
