The Competition Commission has rejected the protests of small businesses by lifting price controls on banking for small and medium-sized enterprises (SMEs) at Britain's biggest four banks.
The commission said yesterday it would remove the controls on HSBC, Royal Bank of Scotland, Barclays and Lloyds TSB because the market had become more competitive since the measures were introduced in 2003.
But the watchdog recommended stricter monitoring by the Office of Fair Trading of the banks' behaviour to make sure prices are clear and that customers can switch lender easily.
The price controls were brought in after an investigation by the commission into the SME banking market in 2002. They made the four banks offer an account that offered interest of no lower than 2.5 percentage points below base rate, free money transmissions, or both.
The commission's announcement confirmed its preliminary decision in August. At that time, the Federation of Small Businesses said banks were not honouring agreements they made when the price controls came in.
The FSB said in August that more than 70 per cent of small businesses did not know about the banks' agreements to give them a better deal, and more than half had not been offered either of the options on pricing.
The commission had imposed "behavioural" measures on all the UK's SME banks which included making it easier to switch account, requiring clearer pricing and stopping them bundling up different products and services.
Christopher Clarke, deputy chairman of the commission, said: "Competition in this market and the interests of customers are best served by continuing to improve customers' awareness of the banks' individual offers and their ability to switch providers. "This will no longer be helped by the retention of price controls, which were only intended as a temporary, protective measure and not designed to improve competition."Reuse content