Sir Nicholas Goodison, president of the British Bankers Association and chairman of the TSB, said customers should if necessary take their complaints 'right to the top.'
He rejected suggestions that individual banks should set up new internal complaints systems, saying that bank chairmen already carried out the function. Norman Lamont, the Chancellor, has looked at similar proposals but is thought to have dropped them in the light of the banks' objections.
He is, however, expected to go ahead later this week with plans, reported last month in the Independent, for a limited extension of the powers of Lawrence Shurman, the Banking Ombudsman, to allow him to cover incorporated small businesses.
The Chancellor will also publish a report he commissioned from the Bank of England on the interest rates charged to small businesses, which will clear the banks of failing to pass on base rate cuts.
Because the report has come down largely in the banks' favour, Mr Lamont has been seeking ways to respond to a raft of other complaints he has received against the banks directly or through MPs.
The banks appear to be coming around grudgingly to the Chancellor's idea of extending the powers of the Banking Ombudsman. But they are insisting that he must look only at maladministration and not make judgements on commercial lending decisions or interest rates.
They acknowledge, however, that these wider areas are covered by the banks' internal complaints systems.
Reinforcing the advice from Sir Nicholas, Brian Pitman, vice-president of the BBA and chief executive of Lloyds Bank, said 'the Ombudsman in most banks would be the chairman'.
He said that if customers went to the 'highest possible level' in the banks rather than writing to their MPs or to the Chancellor they would get fair treatment. 'We certainly would encourage MPs to write to us,' he said.
Mr Pitman said too few customers were aware of the procedure for complaining, a situation that he said the banks had to improve.
He also made it clear that senior bank executives were keen to hear what goes on lower down in their organisations. 'If there is somebody in the organisation being high-handed with the customers in your bank, that is information you want to know.'
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