Could a lender of a business loan require a borrower to open a current account with it?

This question was the crux of a recent decision of the Competition and Markets Authority (CMA) published on 2 December 2025. Changes in the lending market and in borrower behaviour have opened the door to banks being able to reimpose a condition on borrowers of business loans to hold an account with that bank. But will the relaxation of the undertaking see a return of the condition?

Background

A number of banks back in 2002, gave undertakings that they would not “require as a condition of granting a business loan or approving the opening of a business deposit account, that a small or medium-sized enterprise customer should open or maintain a business current account” with that bank. These were known as the SME (Banking Behavioural) Undertakings 2002 (Undertakings) and the banks which provided the undertakings were referred to as the Bound Banks. The decision of the CMA following a review has released the Bound Banks from the Undertakings, meaning now there is no restriction on them or any other lender imposing such a condition and requiring a tied bank account… but will they?

The CMA found that the lending market has changed with new and different types of lenders entering the SME lending space since 2002. Bank lenders, non-bank lenders and other alternative funders are available in the SME lending market today. So, the sway of the Bound Banks and percentage of the market share of SME lending have both reduced. Bound Banks and, indeed, other banks with retail banking business for SMEs will be reluctant to impose any conditions, such as a tied bank account, which could affect their reputation or indeed the uptake in their SME lending portfolio.

Customers too (ie SME borrowers), the CMA found, are more discerning having developed behaviours such as shopping around, switching bank accounts from one bank to another, and looking at alternative lenders, so will be less likely to agree to a condition which could restrict or affect their day-to-day business, financial arrangements and costs. With a wider lender market of bank and non-bank lenders, as well as other funders to choose from, SME borrowers could vote with their feet and opt for, or switch to, another lender if they are required to have a current account with a bank lender if it does not suit their financial management.

Comment

Since 2002, who could have predicted what we have seen in the lending markets: bank mergers, the financial crisis of 2008/9, and the additional bank regulation and bank ring-fencing; which followed Brexit and changes to the look of the UK and EU lending markets, the introduction of Open Banking in 2018, online banking for businesses, the rise of fintechs and non-bank funders entering the market, and not least, the development of tech solutions and AI. SME borrowers now have much, much more information and many more funding options at their fingertips today in 2025 than when the Undertakings were put in place in 2002.

None of this, of course, looks at whether or not an application from an SME for funding from a traditional or an alternative lender will be successful, or whether its business will flourish, which, of course, is still open to economics, market demand and liquidity. But could a bank lender offer lower costs on business loans if, while not a requirement, there is an option to have a business account with it, and in that way meet the needs of both lender and SME borrower with the release of the Undertakings?