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Price controls on SME bank accounts lifted

The Competition Commission (CC) has ended the temporary price controls imposed in 2003 on the UK’s four largest banks servicing small and medium-sized enterprises (SMEs).

But the commitments by the big banks undertakings designed to make the market more competitive remain in place. Among the restrictions included in this measure is the bundling of specific financial products sold to smaller businesses.

The banks must also publicise any changes in charges. The CC has recommended to the Office of Fair Trading (OFT) that it should reinforce the awareness and the impact of the banks’ undertakings. In particular, it is recommending that the OFT should:

  • actively monitor all SME banks’ behaviour following the lifting of the price controls, and raise awareness of any worsening of their offers;

  • work with the banks to ensure that SMEs become more aware of the banks’ obligations to make it quick and easy for them to switch accounts; and

  • explore with the British Bankers’ Association the scope for imposing the obligations on the banks under the Banking Code at its next review.

    The price controls were put in place following an investigation by the CC into the SME banking market in 2002. It required the four banks to make available to SMEs an account that offers an interest rate of at least 2.5 percentage points below base or free money transmission services, or both.

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