A report by the Competition and Markets Authority (CMA) has found what many small business owners already know – that banks don’t do enough to look after and retain their small business customers. However, this looks set to change with the introduction of measures from the Competition and Markets Authority.
The report concluded that larger and older banks don’t compete hard enough for customers, whereas smaller banks find it difficult to grow. The end result is that customers typically pay more, and don’t benefit from new services. The report also found that small businesses lack access to comprehensive information on service quality, bank charges, and credit availability.
To counter this, banks will now have to provide the independent charity Nesta with financial backing and technical support, and banks will have to introduce a range of measures for small businesses, such as loan eligibility tools.
The other key reforms outlined are:
- Banks will be required to provide objective information on their quality of service available both online and in-branch. They’ll also need to send out periodic information when it comes to events such as increases in charges, and bank closures.
- Banks will be required to implement Open Banking by 2018, which means small businesses will be able to securely share their data with other banks. The result? They’ll have the freedom to manage multiple accounts, and compare different offerings.
- The CMA wants banks to send alerts to customers going into unarranged overdrafts, so they can avoid charges - vital when you’re managing small business cashflow.
It’s great to see that banks will be required to provide a better deal and more transparency for startups – hopefully this will see even more businesses given the support and backing to grow.