Britain's main four banks HSBC, Barclays, Lloyds and the Royal Bank of Scotland will be assessed as to whether they are making excessive profits from small- to medium-sized enterprises (SMEs). The OFT is reviewing a set of undertakings by the Competition Commission (CC) in 2002.

BAPC chairman Sidney Bobb welcomed the OFT's review. "The smaller you are, the more abuse you face," he said. "Certain things annoy small businesses and banks' charges are prohibitive."

The BPIF deputy chief executive Cicely Brown added: "We don't get that many complaints from members but it might be that many firms decide to grin and bear it. But a review would be useful as there needs to be more flexibility from banks."

The OFT is likely to take nine months to investigate and aims to advise the CC by the end of 2006.

All four banks have said they have fully complied with the undertakings. They were designed to "remedy excessive profits" and encourage price competition. "I think the banks have been more careful in terms of sticking to the strict rules," added Bobb.

In 2002, the CC found that the value of balances for SME customers was around 228bn. Between 1998 and 2000, banks had made excessive profits of 700m from SMEs.

Competition Commission
Findings of its 2002 report
- SMEs accounted for 55% of employment and 45% of UK business turnover

- Value of bank balances for SME customers was 228bn

- Banks made excessive profits of well over 700m between 1998 and 2000