FSB: One million small businesses dissatisfied with their high street bank

Research shows that over a quarter of small businesses have been dissatisfied with the support offered by their high street bank in the last 12 months.

The Federation of Small Businesses (FSB) latest monthly survey shows that a quarter of all respondents are dissatisfied with the support offered by their high street bank over the last 12 months. This comes on the same day as the Future of Banking Commission report into the banking sector.

Throughout the duration of the recession small firms have faced difficulties in accessing finance and credit, and an FSB-ICM survey of more than 1,300 members showed that 25 per cent of firms are not happy with the support offered during that period – equivalent to 1.2 million small businesses.

The results show that the level of dissatisfaction rises as the number of business managers in charge of the account over the previous two years increases.

Dissatisfaction ratings for those who have had one (13%) or two (27%) business managers is quite low but the rating increases significantly when you get to those firms which have three or more, with three at 52 per cent, four at 53 per cent and five at 70 per cent dissatisfaction.

Despite 26 per cent of firms saying that having a good working relationship with their bank manager is one of the most important factors in their choice of high street bank, almost half (46%) of respondents’ bank managers are not based locally.

Other factors important in the choice of bank for small firms are convenient location of the branch (33%), holding a personal account with them (30%) and having the most competitive business account package (30%) – which 21 per cent of respondents note as the single most important factor.

The FSB is calling for the establishment of a Post Bank utilising the Post Office network. This will provide a local and trusted option for the UKs small businesses as well as providing more competition into the banking sector.

John Walker, National Chairman, Federation of Small Businesses 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.”

Notes to Editors

The FSB is the UK’s leading business organisation with over 213,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk

The FSB-ICM Survey panel were surveyed between 20 May and 1 June 2010 and received 1,383 respondents. To view the results, go to www.fsb.org.uk

3.This is a national release; additional information may be available on a regional basis. For regional FSB contacts please go to www.fsb.org.uk/regions