A Bradford-based accountants’ leader has called on banks to rebuild trust with small businesses, which he said was in danger of breaking down.

Tim Parr, president of the West Yorkshire Society of Chartered Accountants, said it is time for banks to repair the damage caused by the credit crunch and banking crisis, especially with the economy in such a fragile state. Mr Parr, a tax partner at the Saltaire offices of Baker Tilly, urged bankers to help small firms grow during 2011.

He said that, according to a new survey by the Institute of Chartered Accountants in England and Wales, some small and medium firms felt ‘bruised’ and ‘scarred’ by the way they have been treated by their bank during the recession and whatever trust that had existed had disappeared as a result.

This had been made worse by a perceived lack of authority of the banks relationship managers who were often seen as not supporting clients and applying a ‘tick-box mentality’ when responding to applications for finance.

ICEAW also found that, in spite of current low interest rates, banks had increased fees and charges to widen margins. They were also demanding more security and personal guarantees in return for funding which added further pressure on small businesses.

The process for applying for finance took longer and banks giving out inconsistent messages about whether an application would be successful.

Bankers have been urged to apply more flexibility in the way they deal with smaller firms and improve communications.

Tim Parr said: “Businesses miss the flexibility and helpfulness which used to exist in banks. As the UK recovery becomes more established, businesses will need finance for working capital and investment to help economic growth.

“Banks need to start rebuilding these relationships now to give SMEs confidence to seek finance for growth and this should be addressed urgently.”