HISTORIC PRESS RELEASE : Big four banks agree to competition commission remedies for small and medium size enterprises [July 2002]

The press release issued by HM Treasury on 18 July 2002.

Chancellor Gordon Brown and Competition Minister Melanie Johnson today accepted undertakings from the four main clearing banks to pay interest on current accounts or provide free money transmission services to their SME customers in England and Wales.

Mr Brown said:

“The access to finance and the quality of service small businesses receive from banks are critically important to theirs, and the British economy’s, productivity and prosperity. I welcome the steps taken by the banks to take forward the Competition Commission’s proposed remedies to promote competition in this sector. Many of the 3.5 million small businesses in the UK have the potential to benefit from today’s announcement.”

Melanie Johnson added:

“I am pleased that the banks have addressed the interim remedies which we wanted to see in place by the end of the year. I now hope we can also make good progress on the long term remedies which are needed to make competition in this market as effective as possible.”

The banks concerned are the Royal Bank of Scotland Group, HSBC, Barclays and Lloyds TSB.  The rate of interest paid will be at least the Bank of England Base Rate less 2.5%.  Each bank has undertaken to implement the remedy no later than 1 January 2003.