The Federation of Small Businesses (FSB) latest monthly survey shows that a quarter of all respondents are dissatisfied with the support offered by their high street bank over the last 12 months. This comes on the same day as the Future of Banking Commission report into the banking sector.
Throughout the duration of the recession small firms have faced difficulties in accessing finance and credit, and an FSB-ICM survey of more than 1,300 members showed that 25% of firms are not happy with the support offered during that period - equivalent to 1.2 million small businesses.
The results show that the level of dissatisfaction rises as the number of business managers in charge of the account over the previous two years increases.
Dissatisfaction ratings for those who have had one (13%) or two (27%) business managers is quite low but the rating increases significantly when you get to those firms which have three or more, with three at 52%, four at 53% and five at 70% dissatisfaction.
Despite 26% of firms saying that having a good working relationship with their bank manager is one of the most important factors in their choice of high street bank, almost half (46%) of respondents' bank managers are not based locally.
Other factors important in the choice of bank for small firms are convenient location of the branch (33%), holding a personal account with them (30%) and having the most competitive business account package (30%) - which 21 per cent of respondents note as the single most important factor.
The FSB is calling for the establishment of a Post Bank utilising the Post Office network. This will provide a local and trusted option for the UKs small businesses as well as providing more competition into the banking sector.
John Walker, national chairman, Federation of Small Businesses said: "As we move into recovery it is imperative that the banks start to engage with their customers again. Businesses need to have a good relationship with their bank manager and as many aren't based locally this can prove difficult.
"On average, the firms surveyed had held their account at the same bank for 14.7 years. When they first started banking there, the manager would have known their name and the business and would have been the one to make a decision about the account, not a centrally based computer as happens now.
"The future health of the economy depends on restoring trust between small firms and the banking system, as turning ideas and innovation into business growth requires a reliable financial partner. Businesses also need to have a right to appeal decisions the high street banks make which they deem unfair.
"The UK must develop alternative forms of finance for small businesses, which will bring greater competition to the banking sector. The FSB believes that this would be best achieved through establishing a Post Bank - utilising the Post Office network. This will provide a local and trusted bank that will allow small firms to grow."
