Banks vow to treat businesses better

The UK's eight largest high street clearing banks are facing crunch time over their efforts to clean up their act in the services they provide to small businesses.

The banks have been working with the Office of Fair Trading on agreements to improve the lot offered to small businesses and eradicate unfair practices. These undertakings were yesterday passed on to the Treasury and the Department of Trade and Industry. It is now up to the Government to decide whether the banks' promises will be enough to ensure small businesses get a better deal.

The recommendations include improving the time taken to complete account switching, publishing performance objectives and their efficiency in achieving them, removing charges on closing or switching accounts and providing a portable credit history on request. The banks also promised to be more upfront about standard tariffs for money transmission services, and inform businesses of whether a charge for an unauthorised overdraft is levied.

The issue was brought to light earlier this year in a report from the Competition Commission, which found the banks guilty of operating a "complex monopoly" in small business bank accounts.

The OFT was asked by the Government to investigate the banks, which include Barclays, Bank of Ireland, Bank of Scotland, AIB, HSBC, Lloyds TSB, National Australia Bank and the Royal Bank of Scotland.