Banks must restore trust, says ICAEW
Relationships between banks and their small business clients are "breaking down" in the West Midlands. That’s according to research by the Institute of Chartered Accountants of England and Wales (ICAEW). The institute said it is now calling on banks to "repair the damage and restore trust in order to help businesses to grow in 2011".
The survey was conducted by Ipsos MORI.
Some small businesses which responded to the survey said they felt "bruised and ‘scarred" by the way they had been treated by their banks. ICAEW said that respondents also highlighted the banks’ relationship managers’ "lack of authority".
Such managers are often seen as not supporting their clients, but rather relying on a tick-box mentality when responding to applications for finance, said the institute.
Vipul Sheth, president of the Birmingham and West Midlands Society of Chartered Accountants, said: "Businesses miss the flexibility and helpfulness which used to exist in banks. As the UK recovery becomes more established businesses will need finance for working capital and investment to help economic growth. Banks need to start rebuilding these relationships now to give SMEs confidence to seek finance for growth and this should be addressed urgently."
In response to the survey, ICAEW said it would like to see banks make "a greater effort" in making contact betweenlocal bank personnel and businesses, and introduce more clarity in the process of applying for finance, including a commitment by banks to a 28 day turnaround for 95 per cent of finance applications.
Sheth adds: "Whilst these recommendations require the banking sector to take a lead, it is critical that government, the banking industry, business groups, small businesses and the accounting profession work together to help resolve these issues in the months ahead."
