Probe into why firms can't get loans: Banks investigated for first time in a decade OFT probe is a sign of the long-running crisis facing small firms Complaints about rip-off charges and high interest rates on loans Investigation is victory for Mail's 'Make the Banks Lend' campaign The Office of Fair Trading yesterday revealed plans for the first investigation into Britain's troubled small business banking sector for more than a decade. The probe by the Government watchdog is a sign of the long-running crisis facing small firms, many of whom desperately need cash but cannot get it. Others complain about the struggle to even open a current account, the rip-off charges and high interest rates on loans, and the demand to secure a loan on an entrepreneur's family home. Crisis: Small firms complain about the struggle to even open a current account, the rip-off charges and high interest rates on loans, and the demand to secure a loan on an entrepreneur's family home (file picture) The investigation is a victory for this newspaper's "Make the Banks Lend" campaign, launched nearly three years ago, which has regularly highlighted the plight of small firms in Britain. The OFT said its investigation, known as a "market study," will cover banking for small and medium-sized businesses in England, Northern Ireland, Scotland and Wales. Clive Maxwell, chief executive of the OFT, said: "A competitive banking system and access to finance is vital to businesses and to economic growth." The investigation will examine if: Small firms have "access to services that meet their needs and represent good value" A lack of competition between banks is "holding back" lending to small firms, and other types of finance Certain types of small firms, such as start-ups, "face particular difficulties." The move comes after Business Secretary Vince Cable last week slammed the failure of Britain's banks to lend money, saying many entrepreneurs are furious about their treatment. He said: "They can't understand why banks - five years on from that crisis, with the banks having been helped by the taxpayer - they are still not supporting the real economy. That is where I think there is a real anger. Anger: Business Secretary Vince Cable (pictured on June 5 in central London) last week slammed the failure of Britain's banks to lend money, saying many entrepreneurs are furious about their treatment Asked if the Funding for Lending Scheme, the Government's latest attempt to solve the problem, will cure the problem, he said: "Well, it isn't at the moment." Mr Cable added: "It is overwhelmingly targeted at the mortgage market which is frankly where we don't need more demand." Net lending - which is the total amount of money handed out by the banks minus the amount paid back by firms - has mostly been in negative territory since the financial crisis began. The latest figures, from the Bank of England, reveal two of the biggest culprits are Lloyds Banking Group and Royal Bank of Scotland, both bailed out by taxpayers. With the concentration of banking in the last 20 years, real competition and choice has all but vanished John Allan, Federation of Small Businesses A recent report found more than half of small firms in some parts of Britain such as the West Midlands and the North West have been rejected by their bank for a loan over the last two years. Yesterday a report by the Bank said many firms "still struggled to obtain working capital or to finance growth." Others are "reluctant" to agree to onerous terms and conditions on loan deals, it said. John Allan, national chairman of the Federation of Small Businesses, said: "With the concentration of banking in the last 20 years, real competition and choice has all but vanished. More competition is needed across the sector, not just in retail banks but from alternative providers, if access to finance is to improve for small firms and for innovation to flourish. For too long, the main high-street banks have had a monopoly on lending to these customers. Yesterday a spokesman for the British Bankers" Association said: "The banking industry is fully supportive of a competitive finance landscape for businesses which drives innovation and will co-operate fully with this market study."