High-street banks brace themselves for damning report on business practices

Britain's high-street banks will learn the findings today of a 16-month inquiry into their business practices conducted by Don Cruickshank, the former telecoms regulator.

Top names such as HSBC, Lloyds TSB, NatWest and Barclays are expected to be severely criticised for their policies on cash machine charges, account transferral and the pricing of banking services to small businesses.

The 400-page report, which was commissioned by the Chancellor, Gordon Brown, is expected to lead to an investigation of the sector by the Competition Commission and could be used as the basis for new legislation.

Banks are worried that the report's publication, scheduled for 7am this morning, could spook investors, sending shares in the already out-of-favour sector tumbling. One industry analyst said: "Thefact that the announcement is being made before the markets open suggests that it will be price sensitive."

Barclays is seen by industry experts as the most vulnerable to the results of the investigation because of the size of the profits it makes from its credit card operations. HSBC is thought to be less at risk because it is partly insulated by its exposure to other markets, such as the United States and Asia.

Mr Cruickshank has already made clear his views on ATM (automatic telling machine) charges. He believes that customers should pay no more than 30p for a routine withdrawal, well below the £1 fee proposed by some of the big players such as Barclays.

He is also expected to recommend measures to improve the mobility of current accounts. His proposals could include the introduction of a standard account numbering system which would allow people to take their account numbers with them, making it easier for them to change banks.

Mr Cruickshank is expected to insist that clearing and payment systems should be opened up to competition to improve customer service and control costs. He is also likely to hone in on the problems created by e-commerce, including the need for paper signatures to back up electronic transactions. Other proposals could include a cut in charges to small businesses, a reduction of the time it takes for banks to clear cheques, and cheap current accounts for poorer families to help meet the Government's commitments on social exclusion.

However damning the findings, it is unlikely that the banks will accept Mr Cruickshank's proposals without a fight. Insiders expect strong lobbying from the big names if they are unhappy with the report's findings.

Mr Cruickshank's review was ordered by the Chancellor in his 1998 pre-budget report after his repeated requests for the Office of Fair Trading to conduct an inquiry into anti-competitive practices in the banking sector were rejected. Officials at the Treasury yesterday remained silent on the contents of the report.

One banking analyst said: "I am surprised that the details have not been leaked - it suggests that Mr Cruickshank's findings are more damning than we had thought."