{"id":156418,"date":"2023-10-24T08:33:31","date_gmt":"2023-10-24T07:33:31","guid":{"rendered":"https:\/\/startups.co.uk\/?p=156418"},"modified":"2023-10-24T08:35:29","modified_gmt":"2023-10-24T07:35:29","slug":"high-streets-banks-saving-rates","status":"publish","type":"post","link":"https:\/\/startups.co.uk\/news\/high-streets-banks-saving-rates\/","title":{"rendered":"High streets banks are \u2018keeping billions\u2019 from Britain\u2019s SMEs"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]Research by Allica Bank has found a hidden savings penalty of more than £7.5bn a year for SME bank customers who are facing what it calls an “equally tough cost-of-business crisis.”<\/a><\/span><\/p>\n

The hidden savings penalty includes SMEs being denied the same higher <\/span>savings rates<\/span><\/a> that larger companies are routinely offered by the big banks. <\/span><\/p>\n

There are approximately £275bn of SME deposits in the UK. Using Bank of England interest rates alongside interest rate data from individual banks, Allica’s new research found that £150bn of SME deposits are in current accounts that offer no interest.<\/span><\/p>\n

In addition, £125bn of SME savings are in accounts offering interest, but are subject to a hidden SME penalty because big banks are routinely offering large companies higher interest rates on their savings compared to the rates they offer small businesses.<\/span><\/p>\n

Missing money<\/h2>\n

The average difference between <\/span>interest rates offered<\/span><\/a> to large companies compared to SMEs is currently more than 2% – covering both instant access and term\/notice deposit accounts.<\/span><\/p>\n

Overall, this means that SMEs are collectively being denied more than £7.5bn in savings interest annually – £150bn being denied 3.5% savings interest totals £5.25bn, and £125bn being denied on average 2% higher rates available to larger companies comes to £2.5bn.<\/span><\/p>\n

Allica claims banks take advantage of the fact that small business owners rarely have time to shop around to get a good deal – unlike, it says, the treasury departments of corporate customers.<\/span><\/p>\n

Allica has written to treasury select committee, asking it to look at the UK’s business savings market in closer detail to ensure that all banks are doing their level best to pass on <\/span>interest rate<\/span><\/a> rises to small firms, small business owners are treated fairly compared to larger companies, and far greater levels of transparency are introduced into the savings market for SMEs.<\/span><\/p>\n

The bank has also asked the committee to ensure Financial Services Compensation Scheme (FSCS) limits are not enabling banks to keep interest rates low – and consider if current FSCS limits should be increased from £85k to £250k for small businesses to remove any potential fears SMEs may have of holding large balances with one single bank.<\/span><\/p>\n

“Despite [SMEs] being the engine room of the economy, contributing a third of GDP, they have been neglected for too long and business banking is increasingly impersonal, inconvenient and of poor value,” says Richard Davies, CEO of Allica Bank.<\/span><\/p>\n

“Our research shows this is particularly true for SME savings, where SMEs are getting a raw deal with the big banks – it’s a scandal they’re missing out on more than £7.5bn of interest on their hard-earned cash every year.”<\/span><\/p>\n

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