Banks are set to escape tough new regulations covering their dealings with small businesses in favour of a code of conduct.
Despite damning evidence from the Competition Commission, which concluded that a complex monopoly existed in the sector, the Department of Trade and Industry will focus on "soft" options to generate more competition and increase transparency. It will publish these proposals, expected in the next few weeks, in its response to the commission's findings.
DTI ministers will say it must be made easier for companies to switch between banks to find the best deal, including the acceptance of "portable" credit histories for each small and medium enterprise on CD-Rom.
Proposals such as a windfall tax on excess profits and rigid controls on charges have been dropped.
