Businesses are being hit by ‘stealth’ charges and changes in conditions imposed on them by banks because of the credit crunch, a Birmingham law firm has said.

Suzanne Gilhooly, of Harrison Clark, with offices in Worcester and Birmingham, warned businesses not to just accept additional fees and increased charges imposed on them by commercial banks suffering from the global crisis.

And she said her firm had even had to take action to recoup unfair charges put on West Midlands businesses.

“It is clear as banks seek to recapitalise, part of that approach is to ‘revisit’ the terms of banking with their commercial clients,” she said “Many business people describe this process somewhat differently. We have a client who borrowed from a bank in 2006 and was paying a percentage over the business rate, then the bank said ‘we want you to pay a much higher rate because we are facing a big risk’.

“Obviously banks are trying to renegotiate and the banking terms may let them review facilities, but even in that, they have to act with good faith. They can’t just arbitrarily say ‘well that’s it’.

“Clients are perfectly within their rights to ask for evidence the risk has increased.”

She said the new conditions were often just ways of charging customers more, and many customers had seen the banks trying to impose more restrictive commercial terms.

This could be in additional fees or charges or an attempt to increase interest rates directly or indirectly, often by trying to change the start point of interest rate calculation from the national base rate to the higher Libor rate used by banks lending to each other.

This could result in significant financial consequences for businesses, she said. “Our advice is any business faced with such a position from their bank should not simply accept the revised terms being offered,” she said. “Whilst it is never a move to take lightly – particularly in the present climate – to get into a dispute with one’s bank, any customer should put the bank on notice to justify its changes in terms of the specific provisions in their agreements that allow them to do it and also to establish their reasoning has been justified; the banks are often required to show ‘reasonable grounds’ for any change or re-assessment of risk.”

Harrison Clark has seen several instances of banks trying unilaterally to change terms with business clients.

Although changes were often based on fine print in banking documentation, she said Harrison Clark had often been able to challenge the changes. On one occasion, this led to a significant amount of money being recovered.

Adrian Lloyd, the enforcement director at the Banking Code Standards Board, said: “We focus on what’s covered in the banking code, and it has very clear requirements about notifying customers about changing charges.”