Small businesses are being treated like second-class customers by Australian banks, according to new research, despite claims to the contrary from the Australian Bankers’ Association.
Independent finance comparison site Mozo.com.au recently compared loans, savings accounts, term deposits, credit cards and transaction accounts from 29 banking providers.
The research reveals an average 0.56% difference between the best interest rates on offer to personal savings account customers compared to business savings account customers.
This figure was based on a $10,000 deposit. The average difference was calculated from the best personal and business saver rates on offer from 20 financial institutions as at July 19, 2011.
All four major banks – and a handful of others – were found to impose tiered rates on business savers where balances under a certain level earn no interest at all.
Meanwhile, nearly half of the banks surveyed – including NAB, Westpac and Bankwest – offer bonus interest rates to personal customers but not to business customers.
The report reveals standard rates are also often lower for business customers. For example, RaboDirect offers personal savers a 6.5% bonus rate and a 6% standard rate, while business customers receive a bonus rate of 5.6% and a standard rate of 5.1%.
Mozo director Kirsty Lamont says it was shocking to discover how badly small business customers are treated by the banks.
“There is a huge disparity between the interest rates and conditions on offer to personal customers versus business customers,” she says.
“Personal savers get first-class treatment with high interest rates, no conditions and bonus rates to sweeten the deal. Businesses are very much second-class savers, treated to lower rates and what can only be described as punitive and senseless conditions.”
Lamont says while not all banks treat businesses badly, there needs to be more transparency within the business banking market.
“Ultimately, it’s up to small businesses to put an end to bank discrimination by voting with their feet,” she says.
“There’s no reason why you can’t have a loan with one bank, and a credit card and savings account with other providers.”
“If your bank insists on treating you like a second-class customer, go out and get better rates by cherry-picking the best products on offer elsewhere.”
The Australian Bankers’ Association says in principle, it supports initiatives aimed at increasing transparency in banking products for consumers.
“The current Code of Banking Practice already applies to small businesses and the ABA is always willing to meet with small businesses and their representative organisations to discuss any improvements,” the ABA said in a statement.