However, the behavioural undertakings designed to make the market more competitive by making switching easier and prices more transparent and by prohibiting the bundling of different products and services will remain in place. The requirement on the four banks to publicize changes in charges will also be retained.

The decision supports the Competition Commission's provisional verdict, which was published in August.

In addition to its decision on the existing undertakings, the CC is recommending to the Office of Fair Trading (OFT) that it should reinforce the awareness and the impact of the behavioural undertakings.

In particular, it is recommending that the OFT should:

• Actively monitor all SME banks' behaviour following the lifting of the price controls, and raise awareness of any worsening of their offers;
• Work with the banks to ensure that SMEs become more aware of the banks' obligations to make it quick and easy for them to switch accounts; and
• Explore with the British Bankers' Association the scope for imposing the obligations on the banks under the Banking Code at its next review.

The price controls were put in place following an investigation by the Commission into the SME banking market in 2002. They required the four banks to make available to SMEs an account that offers an interest rate of at least 2.5 percentage points below base, or free money transmission services, or both.

They were intended as a temporary measure until the behavioural undertakings, which were designed to make the market more competitive, had time to take effect. The behavioural undertakings apply to nine banks, including the four bound by the transitional undertakings.

CC Deputy Chairman Christopher Clarke explained on Friday that:

"Having listened carefully to all the responses we have received since our provisional decision in August, we remain convinced that competition in this market, and the interests of customers, are best served by continuing to improve customers' awareness of the banks' individual offers and their ability to switch providers. This will provide the best competitive constraint on the banks."

He added:

"This will no longer be helped by the retention of price controls, which were only intended as a temporary, protective measure and not designed to improve competition."

"The evidence since our inquiry in 2003 is that even though the four largest banks continue to hold a large market share and switching levels, whilst improved, are still relatively low, the other banks not covered by the price controls have competed more strongly for SME customers and improved their market position. At the same time, SMEs have raised their expectations of what the banks should provide and are more likely to consider switching."

And concluded:

"There is still room for improvement. We think that the price controls are no longer necessary and that the remaining competition issues are best addressed by the behavioural undertakings that remain in place."

"This is why we are maintaining the measures which ensure that banks make switching easy for SME customers. We are also retaining and looking to strengthen customers' awareness of this obligation and the various products, services and charges offered by the banks. The OFT and small business organizations have an important role to play in further improving SME customers' awareness of their choices and rights as customers."