Ministry to investigate business owners’ difficulties accessing banking

Businesses are increasingly facing problems in accessing basic banking services. The Ministry of Finance is now investigating business owners’ experiences of being denied services.

Increasingly, businesses and their owners have been in touch with Suomen Yrittäjät, the Finnish SME association, regarding their problems accessing basic banking services. Individual banks do not disclose the numbers of customers they reject, nor does any government agency gather information on the topic.

“However, the number of contacts about this problem have multiplied over the past three to four years. Our conservative estimate is that banks reject thousands of business account applications on an annual basis,” Petri Malinen, an economist at Suomen Yrittäjät, says.

For business owners, the most important basic banking services are a basic current account and the means to operate them, such as a debit card and online banking codes, the opportunity to make cash withdrawals, a payment facility and electronic authentication.

More business owners are contacting Suomen Yrittäjät to say they cannot become a customer or open an account in any bank. The inquiries show three major reasons for being denied banking services. A person in charge or part owner of the business has a payment default record, the business owner has a foreign background, or the business trades internationally. In addition, businesses operating in several countries have seen their customer relationships in Finland cut off without explanation.

“For example, a business’s foreign background has become a much more categorical barrier,” Tiina Toivonen, Legal Affairs Manager at Suomen Yrittäjät, says.

Inquiries from businesses trading with Russia have increased significantly following Russia’s invasion of Ukraine. Banks have broken off existing customer relationships or refused to provide services based on trade with Russia without specifying reasons.

“Banks do not explain their decisions, or they say they’ve made an overall decision. A business owner is left with no active opportunity to react to the situation,” Toivonen says.

The Suomen Yrittäjät economist Petri Malinen says it seems that, in practice, any business or other body could be refused when trying to start a customer relationship with a new bank.

A significant proportion of the payment default records consists of records based on corporate debt collection (“tratta”). When corporate debt collection is used against a company, that company can in a very short time receive a payment default record as a result, without any official evaluation of the situation.

“Not all business owners, businesses or people who want to start their own business are able, immediately or in a very short period, to meet all of their obligations to remove their payment default records from the register. Temporary cash-flow challenges or things like payment default records caused by investments should not stop an otherwise healthy and viable business from operating, even if it’s not been able to pay off the debt that caused the payment default record in full,” Malinen says.

Ministry investigates

As part of the overall reform of credit institution legislation, the Ministry of Finance has begun a project to investigate the availability and usability of basic banking services. This survey will gather information about how well basic banking services are currently provided and how they should be developed in future.

The survey will also be used to analyse how available and usable cash is today and how that should be developed in future.

Establishing the problems experienced by businesses is part of a survey which is open until 16 June. You can answer the survey here.

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