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News Release from: The Forum of Private Business
Edited by the Manufacturingtalk Editorial
Team on 01 December 2006
UK bank charges are still a major
business concern
A biennial report investigating the service banks provide showed an overall improvement in service provision from 2004, but the performance of some banks had slipped.
The Forum of Private Business (FPB) has published it's tenth biennial report investigating the service banks provide for private businesses Around 3,700 firms participated in the survey, Private Businesses and their Banks, which is the largest and longest running of its kind
This article was originally published on Manufacturingtalk on 31 Oct 2006 at 8.00am (UK)
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The report looks at areas such as bank performance, bank switching, tracking transactions, transmission charges and the impact of recommendations made by the Office of Fair Trading.
Chief executive of the FPB, Nick Goulding, said that the results showed an overall improvement in bank service provision from 2004, but that the performance of some banks had slipped.
"Overall there was an improvement, but comparing the performance of individual banks over the last three surveys showed significant differences.
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* Bank performance and bank switching - the report presents a league table based on each bank's resulting performance index.* This is calculated using the responses of businesses to the survey.
The report indicates the provision of service by the banks to their business customers is at its best since 1998, but individually there have been differing performances from the banks.
Allied Irish Bank (AIB) retained the title of best performing business bank, despite a slip in performance from the last survey, and was joined in equal first place by Yorkshire Bank.
Clydesdale Bank continued to improve, staying in third place but closing the gap on the best performing banks.
The Royal Bank Of Scotland came fourth, and NatWest was fifth in the league table with a much improved performance index on 2004.
HSBC's performance index and place in the league table fell, moving them down from fourth to sixth.
Barclays was seventh, with an improved index and Lloyds TSB was eighth, despite also recording an improved index.
Whilst the combined performance of the banks appears to be improving, Goulding also highlights the fact businesses are becoming more inclined to change banks.
"The past three surveys have indicated that the percentage of those businesses who were not considering changing bank has fallen from 63.8% in 2002, to 58.3% in 2006.
This shows that firms are becoming inclined to shop around for the best deal." * Charges - the basis on which charges are paid, and the extent to which firms are aware of this, has remained largely unilateral.
There is a noticeable increase in the number of firms who felt that transaction and transmission charges had increased, although this varied according to the size of firm and whether they had fixed or negotiable charges.
* Transaction charges - 51.9% of firms paying fixed transaction charges reported a perceived increase during 2006, compared to 46.1% in 2004.
42.3% of firms paying negotiable transaction charges reported a perceived increase during 2006, compared to 35% in 2004.
The perception of an increase in transaction charges also varied according to the turnover of the business.
For firms on a fixed tariff, the smallest and, to some extent, the largest are the ones who report perceived increases.
* Transmission charges - 42.1% of firms paying fixed transmission charges reported a perceived increase in 2006, compared with 41.8% in 2004.
39.8% of respondents paying negotiable transmission charges reported a perceived increase in 2006, compared with 33% in 2004.
Goulding warned that firms must monitor their charges closely, and banks have more work to do to communicate those charges.
"If necessary, businesses must ask for charges to be reviewed or checked, and banks must make their charging processes as transparent and simple to understand as possible." The survey also found that businesses have a significantly more positive attitude towards the competitiveness of bank charges.
* Interest payments - the survey also indicated a fall in the percentage of respondents receiving interest on current accounts.
In 2004, 54.2% said they did, whilst in 2006 that figure fell to 48.6% of respondents.
* The banking code and Office of Fair Trading (OFT) impact - this tenth report shows that there is a large and significant increase in the proportion of businesses aware of the business banking code.
This has particular relevance in 2006, as the OFT reviews the undertakings given by the major banks relating to the supply of banking services to smaller businesses in the UK.
The report is due to be published at the end of this year.
In 2004 Private Businesses and their Banks showed that 57.5% of respondents were aware of the business banking code.
In 2006 that increased to 78.4%, which Goulding believes reflects the work of the OFT.
"The Office of Fair Trading seems to have succeeded in raising the profile of the principles of the code for many businesses." Goulding added: "The survey shows there has been a change in the attitude and behaviour of smaller firms that is consistent with the objectives of the OFT's measures.
Bank Performance has improved, although more must be done, for example making charges more transparent for businesses." The bank launch will take place at 3pm on Wednesday 29 November 2006 at Portcullis House, Westminster.
* About The Forum of Private Business - The Forum of Private Business (FPB) was formed in 1977 and is a pressure group fighting on behalf of private businesses.
The FPB represents approximately 25,000 UK-based businesses, which employ in excess of 600,000 people, and is a powerful lobbying voice in both the UK and the European Union.
The FPB, as the only full UK member of UEAPME - the organisation that represents small and medium-sized enterprises (SMEs) in Europe - is the most prominent advocate of UK SMEs in Brussels and has a track record of positively affecting legislation prior to its introduction in the UK.
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