Little change in small business banking

Competition Commission recommendations on banking for small businesses have made very little difference to small business owners, says Moneyfacts.

In October 2002 Business Moneyfacts devised three “hypothetical businesses” in order to demonstrate the probably levels of charges for different kinds of business.

The experiment was repeated this month to see if the expected sweeping reductions in bank charges had materialised. The results of the most recent research reveal very few actual changes.

Nikki Cann, editor of Business Moneyfacts, says: “A new small business customer looking for an account would still be wise to shop around for the best deal. The fact is that the recent changes have made very little difference to anyone looking for a business bank account.

“Most banks have opted to pay interest on credit balances, but at the suggested minimum rate of 2.5% below base rate – effectively 1.5% – the balances needed to offset any charges would be enormous.”