The high street banks have been found to have a monopoly over providing services to small businesses.

The Competitions Commission has made the conclusion in an interim report following a year-long investigation and says that the choices open to small businesses are highly restricted.

In its report the Commission said it had "now provisionally concluded that a number of complex monopoly situations exist in relation to the supply of banking services by clearing banks to small and medium sized enterprises. A complex monopoly situation arises if at least one quarter of the specified services are supplied by members of a group of two or more persons (not being a group of interconnected companies) who whether voluntarily or not, and whether by agreement or not, so conduct their respective affairs as in any way to prevent, restrict or distort competition in connection with the supply of those services. However, the Commission has not reached any conclusions on whether any matter operates or may be expected to operate against the public interest".

Concern centres around business current accounts, short-term bank business deposit accounts and overdraft facilities on business current accounts. It provisionally found that there is restricted price competition on short-term deposit accounts through offering low interest rates and giving discounts to some companies and not others. The commission also found that the clearing banks force small companies to take business accounts which restricts the choice of charges they pay and the interest they earn.

Stephen Alambritas of the Federation of Small Businesses welcomed the report. "Ninety percent of all small businesses are locked into the four major clearing banks, and we are hoping that the report will try and unravel this complex monopoly."