Small businesses savage big three banks

Barclays, Lloyds TSB and NatWest are criticised today for the poor service they give to small businesses in a report which suggests the three big banks are being outshone by their smaller rivals.

Barclays, Lloyds TSB and NatWest are criticised today for the poor service they give to small businesses in a report which suggests the three big banks are being outshone by their smaller rivals.

The report, compiled by Nottingham University Business School for the lobby group the Forum of Private Business, found that more than 40 per cent of small firms banking with Barclays, Lloyds and NatWest had cause to complain. Barclays came bottom of the league table ranking the performance of nine banks. NatWest, which is part of Royal Bank of Scotland, was seventh and Lloyds eighth.

Allied Irish Bank topped the table, for the 10th year in a row. Yorkshire and Clydesdale came second and third followed by HSBC, RBS and Bank of Scotland.

The report polled about 5,000 small businesses with up to 250 staff. The banks were rated on competitiveness of interest rate and charges, knowledge of the industry, efficiency and reliability.

Nick Goulding, FPB's chief executive, praised AIB for its "remarkable" consistency, HSBC for being the best of the big banks and Clydesdale for its huge improvement - up from eighth since the last report. But he called on the Bank of England to resurrect its small firms division. He said: "The report clearly shows a worrying variation in bank performance when dealing with small businesses. The Bank of England cannot turn a blind eye and ignore this. Small businesses need to have the full clout of the Bank of England behind them, to ensure banks play fair."

Mr Goulding said there was little evidence to suggest that recommendations by the Office of Fair Trading designed to make it easier for companies to switch banks had led to significant numbers of firms doing so.

The report also revealed a slowdown in the take-up of internet banking. Between 2000 and 2002, the number of businesses using the service had soared from 27.3 per cent to 40.6 per cent, but over the last two years it only crept up to 43.3 per cent.