Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Banks Under Fire for Shortchanging Small Businesses

by March 4, 2024
March 4, 2024
Banks Under Fire for Shortchanging Small Businesses

Major banks are facing increasing scrutiny over their failure to offer competitive interest rates on the savings of small businesses, prompting calls for urgent action to address the issue and prevent SMEs from losing out on over £7.5 billion annually.

Criticism has been directed at banks for offering preferential savings rates to large corporate clients while neglecting smaller businesses. Allica Bank, a digital lender specialising in small business finance, has highlighted this “savings penalty,” coupled with the fact that up to £150 billion of SME deposits earn no interest in zero-interest current accounts, resulting in substantial annual losses for businesses.

Richard Davies, CEO of Allica, has appealed to the Commons Treasury committee to spearhead reform efforts as part of its inquiry into SME finance. This initiative has garnered support from prominent business organisations such as the Institute of Directors and the Federation of Small Businesses.

The banking industry has faced increasing criticism regarding savings rates, particularly as interest rates have risen from record lows since late 2021. Despite this, commercial lenders have been slow to pass on higher rates to depositors, allowing them to widen profit margins and enhance profits.

Calls for improvement in savings rates have intensified, with government bodies like the Treasury committee and the Financial Conduct Authority urging banks to ensure fairness for depositors. However, attention has predominantly focused on retail customers rather than SMEs.

Allica has been vocal about the disparity in treatment of SME savings since October and is now amplifying its call for reform. The bank advocates for an end to the savings penalty and proposes mandatory notifications to SME customers when more attractive rates become available in the market.

These proposed measures are likely to benefit Allica, known for offering superior rates compared to larger competitors. The Treasury committee’s ongoing inquiry into SME finance is expected to generate recommendations on regulatory and policy reforms.

Davies emphasised, “The discrepancy in interest rates offered to companies of different sizes exploits both the market’s lack of transparency and the limited time many small business owners have to manage their finances effectively.”

A spokesperson for UK Finance, the banking industry’s trade body, stressed the competitiveness of the business savings market and advised SMEs to explore various products, including comparison sites, to find the best savings account for their needs.

Read more:
Banks Under Fire for Shortchanging Small Businesses

0
FacebookTwitterGoogle +Pinterest
previous post
Banks on High Alert as ‘Rogue’ Companies House Filings Surface
next post
Unlocking the Entrepreneurial Blueprint: A Journey from Mortgage Maverick to Lead Generation Guru – An Interview with Gary Das

You may also like

How to work on your web content with...

July 24, 2023

Macmillan Cancer Support cut 150 jobs amid soaring...

March 15, 2024

Lowest-paid workers set for 6% minimum wage boost...

September 9, 2024

Mortgage reforms set to loosen for first-time buyers...

January 17, 2025

Rachel Reeves to review import tax loophole in...

April 24, 2025

Construction Skills Shortage Threatens Infrastructure Projects Amid Growing...

April 29, 2024

Calls for regulation of short-term holiday lets in...

July 12, 2024

Pros and Cons of Setting Up an International...

March 14, 2025

Fantastic Gifts For Your Mum When You Cannot...

October 4, 2023

Retailers call for crackdown on Chinese fast-fashion imports...

April 15, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • What Happens When the S&P 500 Breaks Below Gap Support?

      May 23, 2025
    • Trump signs executive orders bolstering nuclear industry, domestic uranium mining

      May 23, 2025
    • Friday Feature: LUMIN Schools

      May 23, 2025
    • Shifts, Not Shocks: Rethinking Rust Belt Decline

      May 23, 2025
    • Tariffs on Imports from China Are Still Too High

      May 23, 2025
    • US and Iran clash over uranium enrichment as nuclear talks resume in Rome

      May 23, 2025

    Categories

    • Business (8,036)
    • Investing (1,986)
    • Politics (15,360)
    • Stocks (3,102)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved