AN INDUSTRY-BACKED campaign to shake up the SME business savings market has launched today (Monday).
SMEs across the country are losing out on more than £7.5 billion of interest each year due to big banks offering lower interest rates on savings accounts than the larger organisations receive.
The Great British Savings Squeeze campaign aims to draw attention to banking inequalities faced by small businesses and is backed by industry heavyweights including the Institute of Directors, the Federation of Small Businesses and the British Independent Retailers Association.
It calls for the following:
- End the SME savings penalty Get banks to start offering small businesses the same savings rates as big firms.
- Notify SMEs of better rates Banks should actively notify their SME customers of what the top three rates in the market are.
- Increase protections for SME deposits Give small firms confidence to save large amounts with all banks, by raising limits for the small business Financial Services Compensation Scheme.
Allica Bank, which provides full-service banking for SMEs with between five and 250 employees, is backing the new campaign, It has campaigned for the wider banking industry to give small businesses a better deal on their savings, allowing this money to be pumped back into local economies.
Back in October the firm – which has an office in Central Milton Keynes – wrote to the Treasury Select Committee asking MPs to investigate the lack of transparency in the business savings market.
This week Allica reiterated this call with a second letter to the committee, requesting that the TSC ensure it covers an investigation of the business savings market in the SME Finance Inquiry it is shortly due to conclude.
The bank’s chief executive Richard Davies said: “It is a scandal that SMEs are missing out on more than £7.5 billion of interest on their hard-earned cash every year, leaving small firms short-changed and holding back vital funding from local economies.
“The variation in interest rates offered to companies of different sizes exploits both the lack of transparency in the market and the limited time many small business owners have available to optimise their finances.
“This campaign will bring attention to that fact, and our goal is for there to be a much greater focus on savings rates for small businesses, in the same way there has been from politicians and regulators on savings rates for consumers.
“We are determined to drive change in the business savings market – Britain’s established businesses deserve better.”
Research conducted by Allica Bank shows that SMEs are typically offered savings interest rates which are 2% lower than rates offered to bigger companies. Around £150 billion of SME deposits are sitting in current accounts which offer no interest at all.
The Great British Savings Squeeze campaign aims not only to raise awareness of the hidden savings penalty but also to gather high-profile support and drive real industry-wide change in the sector.
The campaign has already garnered support from some of the biggest business communities in the country.
The Institute of Directors, the Federation of Small Businesses, the British Independent Retailers Association and the Independent Retailers Confederation have all given their wholehearted support.
The FSB’s chief of external affairs Craig Beaumont said: “It is time SMEs got a fair deal on their savings – after all, the least any bank should be doing is offering a decent savings rate to SMEs.
“Britain’s army of small firms have enough on their plates without having to worry about the rates they are getting on their hard-earned savings.”
Dr Roger Barker, director of policy at the IoD, added: “Britain’s hard-working SMEs deserve to be supported – including by their bank. It is a tough economy out there to survive as a small business so it is vital SMEs are getting decent interest rates on their savings.”
Find out more about the campaign at www.savingssqueeze.com
