The Government has ordered a full investigation into the way banks treat small businesses.
Trade Secretary Stephen Byers and Chancellor Gordon Brown moved swiftly to carry out one of the key recommendations of the Cruickshank report into banking services.
They are referring the banks' provision of services to small and medium-sized firms to the Competition Commission.
Mr Byers said: "A full inquiry will enable the issues identified in the Cruickshank Report to be investigated."
The report, produced by an inquiry team investigating the industry headed by former telecommunications regulator Don Cruickshank, said that neither personal nor small business customers were getting a fair deal from banks.
They were paying between £3 billion and £5 billion a year too much for their banking services.
That amounted to some £40 to £400 for most households in the country and even more for small businesses.
In addition to his call for a reference of small business banking to the Competition Commission, Mr Cruickshank said some parts of the major banks' business banking networks might have to be broken up to create local competition.
The Chancellor will make a further response covering other recommendations of the Cruickshank Report in the Budget statement tomorrow.
The four major high street banks currently supply banking services to 83 per cent of small and medium-sized firms in the UK and the report said they may be acting in a way which stifles competition. Mr Cruickshank said: "There are real problems with the way banks serve small businesses. New banks and new technology are not solutions. So, Government, step in."
Mr Cruickshank also said that personal banking customers were getting a raw deal.
He said there should be clearer and fairer pricing and a complete overhaul of the cash transmission systems which allow money to flow around the economy through cheques, credit cards and cash machines.
To oversee this area he called for the appointment of a new payments regulator (PayCom) who would have overall control of banks' cash and payments networks.
He also wanted to see banking services made available to everyone, especially those on low incomes, with the setting up of a basic no-frills bank account which could not do into debit and would be operated largely without having to visit a branch.
Mr Cruickshank's report makes clear that he believes ordinary consumers, as well as small businesses, get a raw deal from banks.
He said cheques took three days or more to clear, charges for cash machines had been excessive, with amounts of £1 or £1.50 already being charged and retailers paid too much for the facility to offer credit card payments.
He added that he wanted more competition in providing banking to personal customers, especially the three million people in the country who currently do not have access to basic banking services.
Now that the provision of small business banking has been referred to the Competition Commission the spotlight now falls on the possible appointment of a PayCom regulator.
If Gordon Brown agrees to such an appointment it would need legislation and is likely to take over a year to put in place.