Barclays warned by Competition and Markets Authority over small businesses

Barclays has emerged as the most complained-about bank for small business account closures.

The Competition and Markets Authority has censured Barclays after the bank admitted it had broken rules designed to make it easier for small and medium-sized companies to switch banks.

The competition watchdog told Barclays that it must “improve its practices” after the bank said it had breached legally binding promises that it had made in 2002, which were designed to make it easier for business owners to shop around for banking services.

These promises included a ban on banks obliging small companies to open or maintain current accounts before they are able to access other products such as loans.

The rule breach is the latest sign of weak competition in the sector. The four biggest UK-focused banks, Royal Bank of Scotland, Lloyds, Barclays and HSBC, control more than 80 per cent of the small business market.

The CMA said that Barclays broke the rules by preventing small business owners who had its so-called “business premium accounts” from transferring money to or from non-Barclays accounts.

Holders of another type of Barclays business account were told they they had to open a separate current account with the bank. The competition watchdog said it had told Barclays to stop “bundling” products in this way and asked for measures to be put in place to ensure no repeat.

Barclays had already taken steps to fix the problems and will pay £2,000 to refund customers for “payments they should not have had to make”, the CMA added.

Barclays indicated that the issue affected only a tiny proportion of its business customers and that they had been refunded only £3 on average.

A Barclays spokeswoman said: “We’ve been working closely with the CMA and have corrected a mistake we made which affected a small number of business customers. We’ve taken steps to ensure that this does not happen again.”