Banks: We'll be fairer to small firms
MAJOR banks have drawn up secret plans for a code of conduct to handle small business accounts in an attempt to head off a Government clampdown.
The proposals are designed to meet recommendations from the Competition Commission now being considered by Patricia Hewitt, the Trade and Industry Secretary.
The code attempts to ensure fairer treatment for small businesses, making it much easier for customers to switch banks and making charges more transparent. It concentrates on the way banks deal with businesses that have a turnover of £1m a year or less.
The key proposals include letting customers know of interest rate changes on accounts, making it clear when accounts are superseded or become obsolete, spelling out changes of service, and a commitment that complaints and enquiries will be handled within a guaranteed time-frame.
Although the banks have warned that the Government may try to impose price controls, it is clear from the proposed-code that they believe Hewitt will stick to recommending ' behavioural' changes.
One banking executive said: 'The code is effectively a carbon copy of the one we introduced for personal banking customers. It's a significant step but the Achilles heel is that it does not anticipate small business accounts will become part of the automated current account switching system.' That comes into force for personal account holders early next week.
The Competition Commission report was handed to Hewitt last month after a year-long inquiry.