SMEs feeling the strain of higher bank charges

Report finds business bank accounts cost SMEs £10 more per month than three years ago

SMEs are paying more for business bank accounts than they did three years ago, according to a report by Business Moneyfacts.

The analyst firm found that small businesses, including channel players, now pay £10 more per month on average compared with 2003. While the standing charges of Nat-West, Lloyds TSB and Royal Bank of Scotland (RBS) have not changed in the past three years, the report found that HSBC, Barclays and NatWest Direct have all increased their charges by 50p, £3 and £5.75 per month respectively.

Lisa Taylor, researcher at Business Moneyfacts, said most high street banks have failed to take previous recommendations from the Competition Commission onboard.

“Banking is a substantial cost for SMEs. Many could save money by assessing their banking costs and

shopping around for the best deal, but unfortunately most tend to settle where they feel comfortable,” she said.

In 2002 the Competition Comm-ission recommended that the “big four” banks either pay interest on SME current accounts or offer free money transmission services.

“RBS is the only bank to have taken on the Competition Commission’s recommendations, the others have got away with the bare minimum,” Taylor added.

Mike Lawrence, managing director of VAR Bentpenny, said: “Pricing is creeping up and costs us about £30 per month. Banks aren’t open about their charges and we don’t get the free charges that other customers do.”

Andy Cordial, partner at Origin Storage, said: “The charges for SME banking can be very high, some don’t even qualify for overdrafts because of their size or industry sector.”