Banks can do better, says FPB

The quality of service provided to businesses by banks is rising, claims Nick Goulding, chief executive of the Forum of Private Business (FPB), but there is still scope for improvement.

Goulding’s comments were made after the FPB, which represents the interests of approximately 25,000 UK-based businesses, released a biennial survey of 3,700 firms, entitled Private Businesses & their Banks.

During the past two years the standard of service in the banking sector is getting better, says Goulding, ‘but comparing the performance of individual banks over the last three surveys showed significant differences’.

According to the FPB, Allied Irish Bank (AIB) retains the title of best performing business bank, despite a slip in performance from the last survey, and was joined in equal first place by Yorkshire Bank.

Clydesdale Bank was third, the Royal Bank Of Scotland came fourth, and NatWest fifth in the league table, improving on its 2004 performance index.

The FPB observes that HSBC’s performance index and ranking fell, moving it down from fourth to sixth. Barclays was seventh, with an improved index and Lloyds TSB eighth, despite also recording an improved index.

Shopping around

Whilst the combined performance of the banks appears to be getting better, Goulding claims businesses are becoming more inclined to change banks: ‘The past three surveys have indicated that the percentage of those businesses who were not considering changing bank has fallen from 63.8 per cent in 2002, to 58.3 per cent in 2006. This shows that firms are becoming inclined to shop around for the best deal.’

The basis on which charges are paid, and the extent to which firms are aware of this, has remained largely unilateral. The FPB found a noticeable increase in the number of firms which felt transaction and transmission charges were on the up, although this varied according to the size of firm and whether they had fixed or negotiable charges.

When it comes to paying fixed transaction charges, 51.9 per cent reported a perceived increase during 2006, compared to 46.1 per cent two years ago. Just over 42 per cent of firms paying negotiable transaction charges reported a perceived increase during 2006, compared to 35 per cent in 2004.

The perception of an increase in transaction charges also varied according to the turnover of the business. For firms on a fixed tariff, the smallest and, to some extent, the largest are the ones who report perceived increases, says the FPB.

Gould warns that firms must monitor charges closely and banks have more work to do to communicate those charges. ‘If necessary, businesses must ask for charges to be reviewed or checked, and banks must make their charging processes as transparent and simple to understand as possible,’ he says.

See also: Are business banking customers missing out on a competition review?

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

Related Topics

Venture capital funding