Entrepreneurs ignore business banking

Over a million entrepreneurs manage their firm's finances without a business bank account because many regular accounts are more competitive, it has been claimed.

A survey by moneysupermarket.com cites earlier research by Barclays, which suggested that 1.2 million business owners do not have a specialist business account.

The new survey compares the terms offered by different kinds of account and claims that business banking is often not attractive enough. Kevin Mountford, head of current accounts at moneysupermarket.com, said that the situation could precipitate a major shake-up in the sector.

"Historically business accounts were supported by relationship managers, but with increased pressure on costs and centrally managed decision making, the value of these account managers is somewhat diluted. We will undoubtedly see better priced, no-frills accounts coming into play," he said.

"The majority of sole-traders and business partners act and think like consumers and with the threat of fee-based banking coming into the retail sector, we could see a seismic change and the whole market merging into one."