Small businesses are forking out more than £2.3bn a year on transaction charges and fees to run their business banking, an investigation has found.
Companies are not offered the chance to earn interest on their business accounts, despite being given every opportunity to incur fees, the report from business-to-business financial services provider CashFlows found.
The authors of the report have called for a review of the services available to small businesses so they can help to rebuild the economy.
The report comes after a separate study revealed that current account customers could be charged as much as £900 a year for going overdrawn without permission, shattering “the myth” of free banking.
Which?, the group behind the research, called for more transparency around bank charges to help customers choose the correct account.
But businesses may feel they have a right to demand their own review after YouGov’s survey on behalf of CashFlows found 24% of small businesses pay an average of £1,792 on business banking charges each year, including transaction fees.
More than half (52%) of firms said they would move their business current account to another provider to receive lower cost business banking services if they were available.
CashFlows chairman and CEO Nick Ogden said: “There is widespread demand for a change in the way that businesses are served by the existing financial services industry.
“Our research clearly demonstrates that there is a considerable gap in the business banking services currently being delivered by British banks and the services that customers actually require.
“There is a real need, and an ability, to simplify and reduce fees and charges to give businesses transparency and competitive choices.”
Ogden added: “One of the ways to reduce some of these fees and get to a position where interest could be paid is by consolidating a range of services into one current account.”
Meanwhile, the British Bankers’ Association has defended the consumer banking industry against the criticisms made by Which? and branded the report “disingenuous”.
It said: “All banks publish a clear tariff of charges on their websites and provide customers with an annual summary of the transactions passing through their account including a breakdown of any interest and other charges.
“If a customer wants to switch to another bank it’s easy to do so and the industry is working towards making the process even easier.”
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