Industry backs Commission calls for SME banking competition to improve

David Ost, North West Region Director at EEF

Responding to the Parliamentary Commission on Banking Standards, David Ost, North West Region Director of EEF, said: “While much of today’s commentary will focus on improving bankers’ behaviour, one of the most important aspects from industry’s perspective is the Commission’s criticism of the lamentable progress on improving banking competition.

“Increasing competition is business critical if we are to improve SME access to finance in the long term.

“We have long called for a plan of action on this front, in addition to the schemes already in place, and this is overdue. There are no reasons for further delay. The Commission is clear on where the work needs to start. This cannot remain a second-order issue. We urge the Government to make an unambiguous response, otherwise this risks being yet another signal about the lack of dynamism on the high street.”

EEF supports the Commission’s recommendations to:

• Immediately launch a study of the technical feasibility, costs and benefits of a possible common utility platform, full account number portability, and reducing downwards the number of days completion for the incoming redirection service; and
• Immediately set the Competition and Markets Authority to commencing a market study of the retail and SME banking sector.

EEF has also recommended the government:

• Clearly state time-bound metrics in terms of additional switching, additional competition, and ultimately better SME access to finance as a means of gauging progress on any one of initiatives currently being brought forward to increase competition (e.g. the redirection service);
• Consider additional ways to increase customer switching in SME banking, as part of the reviews recommended above, including a time-limited, capped incentive that matches any savings SMEs can achieve by switching banks;
• Focus the new Business Bank more squarely on increasing competition in SME banking as the main long-term priority for improving SME access to finance.