Small firms overlooked when it comes to bank charges
Published: 27 November, 2009
UK: The Supreme Court will make its most important decision yet in the case of Office of Fair Trading v Abbey National and others, in what is expected to be the final legal stage in the long-running bank charges saga.
Ahead of the expected decision, the Forum of Private Business is calling for protection for all small businesses like independent merchants as well as consumers.
If the banks' appeal is dismissed the OFT will be given the green light to investigate the fairness of bank charges and publish a final conclusion in early 2010 – likely to be critical of the current level of bank charges imposed on consumers.
However, the FPB is concerned that the conclusion of the legal process could make it harder for business customers to recover disproportionate bank charges.
Said Matt Goodman, the FPB's policy representative: "Even where finance has been available, many of our members have been subjected to increased bank charges and other changes to their lending agreements with little warning, explanation or justification. Many of them don't have the first clue where to take their complaints and what is classified as disproportionate charging."
Mr Goodman urged the Government to do more to help small business owners resolve their complaints by extending the vital role of the Financial Ombudsmen to hear complaints from all small businesses with up to 50 employees, rather than just micro-businesses (those with fewer than 10 employees and a turnover of less than £1.8m) and private individuals.
The basis of the OFT's action is that the bank charges should be subject to the test of fairness outlined in 'the Unfair Terms in Consumer Contracts Regulations 1999', which only applies to consumers.
The additional cost to businesses is exacerbated by the rise in account fees and the increased cost of lending. Research carried out by the FPB shows business customers are facing increasing charges for their business accounts.
In a recent survey of members, the FPB found that 42% of respondents have experienced an increase in overall banking fees, with just 2% seeing an overall drop.