by Roger House, FSB chairman, Kent and Medway region

I was delighted to be at the FSB annual dinner where both the Chancellor and the Business Secretary spoke to guests.

In his final speech as national chairman, John Walker informed us in a momentous week for the banking sector that he was pleased that reforms seemed to be moving in the right direction.

“Small firms have felt these practices more than most, in a lack of lending and the appalling mis-selling saga which hit many of them,” he said.

“The FSB is pleased that both the Chancellor and the Business Secretary have acknowledged the problems that small firms have faced at the hands of the banks.”

The finance drought from what the Chancellor called “an oligopoly in the banking sector” made clear what we have been saying for some time – that there must be more stability and competition in the sector if small firms are to get the finance they need.

Reforms in the Banking Reform Bill will go some way to achieving this.

However, stability and competition are not mutually exclusive. Competition needs to come from more banks on the high street providing choice for small firms.

So we welcome the moves to open up payment services to make it easier for new banks to start and small players to grow.

This will create a more stable environment, and, combined with a ringfence, mean that small firms will be able to keep running without fear.

The Business Bank, which the Business Secretary touched on, also has a role in opening up non-bank finance to improve competition, but also helping small firms access finance.

The FSA’s pilot redress scheme highlighted the severity of mis-selling with more than 90% of complaints being upheld.

This is a shocking figure and it is now up to the banks to make sure they give appropriate redress.

We have heard from members who have lost their life-time work because of these sharp practices and hope that we can now start to draw a line under this episode.

However, we are fearful that, without the suspension of payments when a business enters into the redress process, some firms may find themselves in trouble.

Vince Cable talked about many contradictory signals in the economy.

He expressed delight that employment was up and that we have seen some rapid employment growth.

He referred to growth in entrepreneurial activity and took this as an indication that business people were prepared to take more risks.

He said: “Government is fixing the plumbing of the financial system but the problem is that there is no water flowing from the pipes.”

But are the plumbers sufficiently trained?