Abbey boss backs bank controls

SECOND-LINE business banking groups were at loggerheads today over whether the imposition of price controls on bank charges will benefit small businesses. The Government intends to bring in price controls on small business loans after Competition Commission recommendations stemming from the Cruickshank Report two years ago which found that the big four banks - HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland - were benefiting from a 'complex monopoly' in the market. The big four have 86% of the small business loans market.

Ian Harley, beleaguered boss of Abbey National, told the House of Commons Treasury Select Committee that price controls are a good policy in the short term. 'It raises the profile of the interest being charged on these accounts,' he declared.

However, he was contradicted by James Crosby, of the Halifax Group HBOS, who said that restricting the price differentiation between banks will hold back HBOS's attempts to break into the market.

Steve Targett, of National Australia Bank, which owns regional banks in Britain including Yorkshire and Clydesdale, said: 'Price controls would play into the hands of the big four and restrict new entries into the market.

'Competition, not price, is the key point here.'