FSB says one million small businesses not happy with high-street banks
Research by the Federation of Small Businesses has shown that over a quarter of small businesses were dissatisfied with the support offered by their high street bank in the last 12 months.
The dissatisfaction is likely to stem from the fact that, since the recession began, small firms have had difficulty in accessing finance and credit. An FSB-ICM survey of more than 1,300 members showed that 25% of businesses are unhappy with the support offered to them – equivalent to 1.2 million small businesses.
The survey also showed that dissatisfaction was highest among who had suffered frequent changes to the business manager in charge of their account. Those who had to deal with one manager over the past two years had a dissatisfaction rate of 13%, whereas 70% of those who had five different managers over the same period were unhappy with their service.
Despite 26% of companies citing a good working relationship with their bank manager as being one of the most important factors in their choice of high street bank, 46% of respondents’ bank managers were not based locally.Other important factors mentioned by respondents included branch location (30%), holding a personal account with the bank (30%) and having the most competitive business account package (30%) – which 21% of respondents note as the single most important factor.
John Walker, FSB national chairman, said: “As we move into recovery it is imperative that the banks start to engage with their customers again. Businesses need to have a good relationship with their bank manager and as many aren’t based locally this can prove difficult. On average, the firms surveyed had held their account at the same bank for 14.7 years. When they first started banking there, the manager would have known their name and the business and would have been the one to make a decision about the account, not a centrally based computer as happens now. The future health of the economy depends on restoring trust between small firms and the banking system, as turning ideas and innovation into business growth requires a reliable financial partner. Businesses also need to have a right to appeal decisions the high street banks make which they deem unfair.
“The UK must develop alternative forms of finance for small businesses, which will bring greater competition to the banking sector. The FSB believes that this would be best achieved through establishing a Post Bank – utilising the Post Office network. This will provide a local and trusted bank that will allow small firms to grow.”