Compare bank costs to get the best deal - February 2011
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Are your banking arrangements are fairly priced? Do you ever look around to see if there’s a better deal to be had, asks Adam Bernstein? With a little time invested, you might find yourself a lower priced tariff. Everyone and every business should periodically check the market. You do so for vehicle or home insurance, so why not with your business bank account? To undertake a comparison you need to understand what you want from a bank and the standards you would wish it to apply to the way it operates. You may want an ethical bank that has strong investment policies that observe social responsibility or human rights, or you may just want a bank that adheres to Islamic banking principles. Also consider those things that you think important such as the services a bank needs to offer you and their cost; how charges are applied to facilities; whether there are additional charges; whether there are enough - or any - branches near where they might be needed; whether the bank has a small business section; and whether there are any special incentives such as free banking to help you make the decision to move. With all of this in mind, you can start your search. Helpfully, the British Bankers Association (BBA) has an online account finder. It’s quite a simple process to follow as it uses tick boxes to identify the nature of the enquiry, the type of business you run and the facilities you’re looking for, such as a branch account or overdraft. Match the search For example, of the main four banks, a cheque written will cost you as much as 79p (Barclays Bank Standard Tariff) or as little as nothing (HSBC Business Direct Tariff), assuming you issue less than 20 cheques per month - £1 per cheque otherwise. Cheques banked can cost as much as 84p per item (RBS Business Plus) and again, they can be banked free with HSBC (Business Direct). Cash is something that the banks want to minimise; it’s obviously a huge cost to process. Again, there’s a huge range in the charges levied for handling cash. The big four will charge anywhere from 53p per £100 (HSBC Small Business) up to £2 per £100 banked (HSBC Business Direct). There are, of course, banks other than the main four. Indeed, there are names that you’ve probably not heard of that offer deals that are well worth looking at. For example, Bank of China (UK) will, with their Private/Public Account, only charge 50p per cheque written, 25p per cheque credited, 0.2% for cash banked and nothing at all for cash taken out, direct debits and standing orders. There’s a charge of £15 per month. Even better, you only need £50 to open an account. Another alternative, Whiteaway Laidlaw Bank, has a Business Current Account that charges £50 per quarter and then 22p per £100 per credit/debit irrespective of whether the money is cash, cheque or electronic. FSB There’s a fee free overdraft facility (you pay no arrangement fees), free change facility and receive interest on credit balances from 0.12 to 0.21% gross depending on the balance. Ethical banks, mentioned earlier, aren’t listed on comparison websites. They need to be hunted out. Google ‘ethical banks’ and various options appear including a link to a list on Wikipedia. There are 15 banks on the list including the Co-operative Bank, Reliance Bank and Triodos Bank that operate in the UK. You will also need to look online for banks that follow Islamic principles. A quick search reveals names such as the Islamic Bank of Britain and LloydsTSB that operate in this sector. All ‘payment service providers’, such as banks or building societies, need be registered with the Financial Services Authority (FSA) and must comply with the Banking Conduct of Business Sourcebook (BCOBS), which took effect on November 1, 2009. This sets the out the rules with which financial institutions must comply in regard to charges that can be made, the length of transaction times and the types and presentation of information that must be provided to customers. The BCOBS also covers the procedures and timings for switching between banks. Seek redress Of course, the rates quoted were correct at the time of writing so do look carefully at the deals being offered. Make a point of regularly checking the deals you are signed up to. But even though the rates can and do change, remember that the key lesson here is that you may be able to make savings on your banking arrangements, especially if you use different banks for different services. Whilst you might lose some continuity you could make further savings. Lastly, keep in mind that rates are often negotiable – be tough!
Business Link - businesslink.gov.uk/ Banking: Conduct of Business sourcebook - fsahandbook.info/FSA/html/handbook/BCOBS The Federation of Small Businesses - fsb.org.uk/benefits/business-banking The Financial Ombudsman Service - financial-ombudsman.org.uk Ethical Banks - http://en.wikipedia.org/wiki/Ethical_banking#List_of_ethical_banks Islamic Banks - http://en.wikipedia.org/w/index.php?title=Special%3ASearch&search=islamic+banks |
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