The eight main clearing banks have given undertakings to make it easier for small and medium enterprises to switch bank accounts.

These are designed to improve competition in the SME banking market.

Patricia Hewitt, trade and industry secretary, said: "I'm pleased the banks have agreed to implement these steps recommended by the Competition Commission.

"Customers will now be able to switch accounts more easily. Added to the previous undertakings, this should result in increased competition in the banking sector and deliver a better deal for small business customers throughout the UK."

Forum Response: Federation of Small Businesses

John Walker, policy chairman of the FSB, said: "Last year the Competition Commission concluded that the banks had overcharged small businesses by £725 million.

"Making it easier to switch accounts will allow small firms to shop around for a better deal and is an important step forward in tackling this overcharging. If business owners don't like what is on offer, it is now easier for them to go else where.

"The promises set clear target times for banks to complete the steps they need to switch accounts. But the banks need to stick to these promises and be completely open about how well they are doing. The Office of Fair Trading will be monitoring the banks but we would like to see the OFT maintain a league table to show how each bank is performing."

"Small businesses now get a better deal on interest, bank charges and account switching. But there are still huge problems with the cost and efficiency of payment systems which govern, amongst other things, how long it takes for cheques to clear.

"The FSB is campaigning for a Payment Systems Bill to be announced as part of the Queen's Speech next month."

Forum Response: Barclays

A spokesman for Barclays told ePolitix.com: "We have long believed that there is a gap between the reality of account switching and customers' perception that it is a difficult and complex process - a view which has been endorsed by Which? among others - and that it is relatively easy.

"If the new targets address this perception, Barclays will benefit along with customers - it will make people more likely to move their banking to Barclays to take advantage of the quality of Barclays relationship banking service and range of products and services.

"We are working towards the implementation date for the new targets and procedures and are confident of meeting it.

"The Business Banking Code already sets in place timescales for providing details of a customer's direct debits and standing orders to their new bank when they request them on leaving the bank - we provide this within three working days.

"Also we will close the customers account without delay when asked to do so. For customers coming to Barclays, we aim to make the process as streamlined and simple as possible, working with their previous bank."