Scotland-Small farms and business take on bank over charges.
SCOTLAND-SMALL FARMERS AND SMALL BUSINESS TAKE ON BANK.
THE GROUP that represents 20,000 of Scotland’s small businesses will raise the thorny issue of unfair charges for business overdrafts with the head of Lloyds Banking Group in Scotland tomorrow.
Susan Rice is the most senior figure north of the border at Lloyds, which now houses thousands more Scottish small and medium-sized enterprise (SME) accounts following the merger with Bank of Scotland. She will meet a contingent from the Federation of Small Businesses (FSB), including Andy Willox, the Scottish Policy Convenor, in Edinburgh.
Bank of Scotland is now being absorbed into the enlarged Lloyds Banking Group, which is 43%-owned by the UK taxpayer. The Sunday Herald recently revealed that it was charging punitive interest on agreed business overdraft facilities even when they were not being used in full. This has been seen as a stealthy way for the banks to claw back money from customers to pay off the UK Government’s multi-billion pound bailout scheme.
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Colin Borland, the public affairs manager of the Federation of Small Businesses in Scotland, confirmed the meeting and said: "We wish to raise some of our concerns about the bank funding and especially the costs of overdrafts, which are having a detrimental impact on our members."
He said the FSB was keen to find out who would be directing banking strategy and if local decision-making on banking matters would remain north of the border.
Borland will no doubt draw some comfort, however, from a new study into small business banking by the UK’s Department for Business, Enterprise and Regulatory Reform (BERR) that pointed to a sharp drop in the number of overdraft limits withdrawn or cancelled in recent months. On the other hand, it showed that a third of SMEs were still not managing to raise the external finance they required.
The meeting coincides with a Lloyds TSB Commercial survey on SMEs, which confirms that more companies require help to see them through the recession. The survey, carried out by Ciao Surveys, found 35% of Scottish SMEs need extra help. Among the biggest concerns are late payments from clients (48%) and a drop in consumer demand (38%). The survey also found that 33% of Scottish firms plan to increase advertising while a third intend to boost service levels to win customers. The report is based on the responses of 500 UK firms with an annual turnover of up to £15 million.
The bank has organised a series of seminars across Scotland this week, including one at Hampden Park tomorrow, one at Pittodrie Stadium in Aberdeen on Tuesday and another at the bank’s Edinburgh headquarters on Wednesday.
Ian Collins, area director of Lloyds TSB Scotland, said: "The aim of our new programme is to offer impartial, practical help - both online and face to face - to firms that are facing new challenges in the current economic climate, putting them in a good position for when the economy begins to recover."
Borland welcomed the survey and expects to hear more about the Lloyds TSB’s small business charter, launched last year to help customers in the downturn. The charter’s key points include passing on future base-rate reductions in 2009; agreeing to any reasonable request for short-term finance; and offering a fairer deal on overdrafts.
