The Office of Fair Trading has today sent a progress report to the Treasury and the Department of Trade and Industry on its discussions with clearing banks.

In March this year the government published the Competition Commission's report on banking services to small and medium sized enterprises and asked the OFT to obtain undertakings from the banks to implement the remedies set out in the report, and to report back on progress by 14 June.

The remedies will require the four largest clearing banks to offer any SME customer operating a current account in England and Wales an account that pays interest of at least the Bank of England base rate minus 2.5 per cent or a current account free of money transmission charges or a choice between the two.

Forum Response: Federation of Small Businesses

John Walker, policy chairman at the FSB, told ePolitix.com: "After an initial flurry of activity we have seen very little evidence of any progress at the main retail banks and we are worried that the whole process is coming off the rails.

"The big four banks have huge resources at their disposal and we are disappointed that the resources have been directed towards opposing the findings of the Competition Commission Report, rather than carrying out its recommendations. This is a snub to the Competition Commission and the OFT."

"Small businesses now hold more on deposit with the banks than they owe in loans. If there are genuine reasons why there needs to be complex changes to banking systems before the banks can act, the least they could do is pay the interest retrospectively. We shall be pursuing the Treasury for just such a commitment."

Forum Response: Lloyds TSB

A spokeswoman for Lloyds TSB told ePolitix.com: "We are liasing with the Office of Fair Trading and they are happy with our progress.

"It is important to remember that these are major changes and we have 80,000 customers to keep informed."

Forum Response: Barclays

A spokeswoman for Barclays told ePolitix.com: "We have been working at pace with the OFT since March to agree the undertakings relating to the pricing remedies.

"This process has involved for example clarification and definition of terms. Examples of this are: the definition of an SME (so that, for example small subsidiaries of major conglomerates are not included); and the definition of money transmission.

"We believe that the OFT understands the magnitude of the task in hand. This is one of the biggest projects that we have undertaken - approximately 600,000 customers with circa 800,000 accounts are impacted. A project of this scale requires detailed development and testing if it is to be introduced without risk.

"Our customers rely on the efficient operation of their current accounts to run their businesses - the risks in compromising this are potentially very serious for them and the economy as a whole.

"It is therefore essential that we test all systems affected very thoroughly to ensure smooth implementation and that there is no adverse impact on customers.

"It is not a question of simply pressing button B instead of button A - there are substantial systems changes required."