Business Banking Code (Hansard, 17 November 2003)

§ Lord McIntosh of Haringey

The Business Banking Code sets standards of good banking practice for banks and building societies for their services to small businesses with a turnover of up to £1 million a year. The Banking Code Standards Board is responsible for the development, production and continuing revision of both the Business Banking Code and the Banking Code, which relates to personal banking. The codes are reviewed every two years.

The Competition Commission reported on banking services to small and medium-sized enterprises (SMEs) in March 2002. It made a number of adverse findings and the Office of Fair Trading has subsequently agreed a series of legally binding undertakings with the main clearing banks to remedy the problems identified. Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland Group have agreed to either pay interest on SME current accounts (at least Bank of England base rate less 2.5 per cent) or provide free money transmission services. The main eight clearing groups have also signed behavioural undertakings to cover a range of issues, including measures to increase transparency of bank charges; and, most recently they have agreed measures that will make it easier for SMEs to switch bank accounts.

The commission also recommended a series of informal remedies. These did not arise from adverse findings and so cannot be enforced under the Fair Trading Act. They cover issues such as the provision of services at agreed cost and compensation for errors. The British Bankers Association has agreed that amendments should be made to the code to cover most of these areas.