I was not a member of the Select Committee on Scottish Affairs in the previous Parliament, but I want to congratulate its then members on the excellent report that they produced, and congratulate the new Chair, Mr Davidson, on securing the debate today. I agree that it is important for the Committee to keep banking services in Scotland under review because the banks are obviously an important and essential part of our economy.
The analysis of how we got here is fairly straightforward. For far too long the banks were undertaking far too much risky lending, and when panic broke out, they went to the opposite extreme and lent hardly anything at all. We would have hoped that the situation would improve, but time after time, when I meet the owners of small businesses in my constituency, I get the same story: they are finding it very difficult to get loans from the banks, even for viable projects or when they have a good order book. Often, even established companies find that they cannot get a loan from the bank on reasonable terms.
There is clearly a lack of competition. Business owners tell me that, even if they go to other banks for a better deal, the cost of moving from one to another is prohibitive. They have to pay a break fee to the bank that they are with and pay a joining fee to the bank to which they want to transfer, so the cost of the switch far outweighs any benefit that they might get from a slightly better deal. I hope that the Government will look at that and investigate how we can have genuine competition in the banking industry. Small business owners often say to me, "Please don't write anything down" or "Please don't take this up with the bank", because they are frightened that, if the bank knew that they had dared to complain, the situation would get worse. Although there may not be evidence coming forward, I and other hon. Members I am sure have found that the same problem exists for many small businesses.
I was pleased that the Government response to the Committee report stated that they believed that banks need to promote lending to SMEs better and that they would be working with the industry on disclosure of regional lending data. I hope that the Minister can update us today on progress on that.
Concerns from individuals are often about unfair banking charges, which is a subject that goes back many years. It has not just happened since the banking crisis of two years ago; for many years before that, people complained about unfair charges. Someone may inadvertently go into overdraft for a day or a few hours, and suddenly huge charges appear on their account, and that can often be the start of debt. For someone on a very small income, for whom every penny is a prisoner, a charge of £30 or £40 can be the start of deeper debt.
The previous Committee recommended that the regulatory authorities monitor banks for bad practice. The Government response was that they were introducing measures to end unfair bank and financial transaction charges, on which I hope the Minister can update us. Other hon. Members mentioned the evidence that Citizens Advice Scotland gave in its update for the debate, but it is important to stress it again. It said that banks are listening more, but the problem is not getting them to listen, but getting them to act. I hope that the Minister will look at that and mention it in his response. I was pleased to note that the Government said in their response that they were committed to providing a free national financial advice service and an annual family financial health check, which the new social responsibility levy on the financial services sector would fund. They said that financial support for Citizens Advice Scotland would be considered in the spending review. I know that the Minister cannot pre-empt the spending review, but I hope that we will get good news either today or next Wednesday.
It is important that banks have a presence in local communities, particularly remote communities, which many in my constituency are. Banking managers based in large towns or cities cannot properly understand small remote communities. That issue was brought to the fore last year when HBOS decided to reorganise its small business managers. Until then, managers were based in many communities in my constituency, but it withdrew them. There was complete uproar on the Island of Islay at the thought of losing the local business manager. It is only fair to HBOS to say that the reason why nearly all the businesses on the island were its customers was that it had a local business manager on the island, unlike the other banks. Many small businesses were with HBOS because it had provided a better service. The decision to take the manager away and operate with managers based on the mainland caused uproar, and there was a massive campaign to keep the local manager. It is important that banks have roots in local communities, and HBOS made a big mistake by withdrawing the business manager and having people phone managers on the mainland. A manager occasionally coming to see small businesses is not the correct way to run a banking business.
Finally, on the theme of banks in small communities, I have long supported the campaign for a post bank, and I hope that the Government will take it forward. A bank based at the local post office would provide much better banking services to small, remote communities-both to businesses and to individuals. I hope that the Government will develop the idea, and that we might see a post bank before long.