Big banks are still ripping off British businesses and other organisations, so boost your cash flow by bagging a better account.
According to research from independent financial researcher Moneyfacts, the UK's big banks have done nothing to improve the lot of British businesses in recent years.
Four years ago, the Competition Commission concluded that UK banks were overcharging small businesses to the tune of £725 million year, so it introduced new guidelines for the Big Four (Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland/NatWest) to follow.
However, Business Moneyfacts magazine today revealed that business banking actually became more expensive in 2005, and the situation hasn't improved in 2006. In fact, there is very little evidence that the UK's big banks are interested in competing for small business accounts.
For example, only two new accounts have been launched so far this year: HSBC's Business Direct Account (which has entered the Moneyfacts Best Buy tables) and Alliance & Leicester Commercial Bank's Business Centre Current Account. What's more, while the other big banks have stood still, Lloyds TSB has actually increased charges on its Business Extra account this year!
Then again, the Office of Fair Trading (OFT) continues to monitor the market for SME (small and medium-sized enterprise) banking, with an announcement expected in early 2007. With any luck, the OFT will order the banks to further reduce the fees and charges which they levy on SMEs, 97% of which use a current account.
Here's how the charges and tariffs for business current accounts vary between the Big Four:
Monthly standing charge: varies from zero at RBS to £5.75 at NatWest/NatWest Direct.
WITHDRAWALS
Cash withdrawals: fee from 57p per £100 at NatWest/NatWest Direct/RBS to 65p/£100 at HSBC.
Writing a cheque: fee from 59p per cheque at Barclays and RBS to 67p at NatWest/NatWest Direct.
Standing orders: fee from 30p per transaction at Lloyds TSB to 60p at HSBC.
Direct debits: fee from 30p per transaction at Lloyds TSB to 54p at Barclays.
DEPOSITS
Non-automated credits: fee from 69p per transaction at RBS to 75p at Barclays.
Cash deposits: fee from 50p per £100 at HSBC to 65p/£100 at NatWest/NatWest Direct/RBS.
Cheques paid in: fee from 26p per transaction at RBS to 28p at Barclays, Lloyds TSB and NatWest/NatWest Direct.
Automated credits: fee from 15p per transaction at Barclays and Lloyds TSB to 20p at HSBC and NatWest/NatWest Direct/RBS.
Frankly, these charges have hardly moved since 2002, and thus remain a right royal rip-off!
In the first quarter of this year, over 151,000 small businesses opened a business bank account for the first time (including my own company, which employs me and my keyboard). However, I wonder how many of these firms used the British Bankers' Association Business Account Finder to find the best account to suit their needs? I certainly did, and my business now has a Best Buy business account which offers free banking for a year, plus interest of 2.75% a year on £1+!
So, if you run a small or medium-sized business (or a partnership, limited company, club, society or charity), then be sure to shop around for a Best Buy account with interest rates and charges to suit your organisation. In addition, don't limit your search to just the Big Four banks. Otherwise, your business will be fleeced by a much bigger one: its bank!
More: Use the Fool to find better personalbank accounts, credit cards and savings accounts!
Disclosure: Cliff owns shares in Lloyds TSB.