Free banking 'will be axed'

vishpatel · 31 July 2006 at 4:22PM

http://www.thisismoney.co.uk/news/article.html?in_article_id=411250&in_page_id=2&ct=5

HSBC warned customers today that free banking is coming to an end. The company said it was 'inevitable' that it would soon charge for current accounts.

This comes despite it unveiling record half-yearly profits of £6.7bn. Between them the big five - HSBC, Barclays, Halifax Bank of Scotland, Lloyds TSB and Royal Bank of Scotland - are expected to make £18bn.

HSBC's move will spark outrage among its 15.6m personal banking customers. Banking experts say that the entire industry is likely to be charging fees within a year.

Current account customers in credit have enjoyed free banking for almost 20 years after the Midland Bank - a predecessor of HSBC - ditched charges.

Re-introducing charges is being seen as a response to changes ordered by the Office of Fair Trading.

The OFT recently told the major banks to cut the amount they charge people who fail to pay their credit card bills punctually from £20-25 a time to £12. HSBC chief executive Dyfrig John said: 'The credit card charges have crystallised the situation.

'We moved quickly to meet the regulator's regulation but it is clear that we have to look at our relationship with our customers fundamentally.

'They want more transparency and that means inevitably moving towards a fee-based monthly charge.' Joe Garner, who heads the bank's personal finance business, said: 'Banking is not free to provide but it is clear that people want to see exactly what they are paying for rather than incur hidden charges.'

LizD_2 · 31 July 2006 at 4:34PM

Absolutely disgusting, more stealth taxes :mad:

Most people have no choice whether to have a bank account or not. How can they be allowed to take our money away from us?

dchurch24 · 31 July 2006 at 4:41PM

Technically, they're not allowed.

Because the law changed in 1984(86?) giving an employer the right to how their employees are paid rather than the employee, this would mean that legislation is forcing people into a situation where they HAVE to buy a 'service' from a third part commercial organisation.

A clear breach of the ECHR laws.

grex9101 · 31 July 2006 at 4:42PM

LizD wrote:

Absolutely disgusting, more stealth taxes :mad:

Most people have no choice whether to have a bank account or not. How can they be allowed to take our money away from us?

Don't flame me, but you're being charged already for having a bank account.

Difference is now that the charge will be "explicit" - whereas previously you probably "paid" via getting less interest on yor credit balances etc.

Will the banks be sensible about this, and charge a "nominal" fee of £2-£5 a month (which surely must be reasonably within the limits of what it costs per account to manage), or will it be more in the £10-£20 bracket?

dchurch24 · 31 July 2006 at 4:44PM

grex9101 wrote:

Don't flame me, but you're being charged already for aving a bank account.

Difference is now that the charge will be "explicit" - whereas previously you probably "paid" via getting less interest on yor credit balances etc.

Will the banks be sensible about this, and charge a "nominal" fee of £2-£5 a month (which surely must be reasonably within the limits of what it costs per account to manage), or will it be more in the £10-£20 bracket?

Hmmmm...let me think.

I would imagine about £30 per month - in Holland, it's something in the region of £1.30 per month for up to 15 DD's to be paid.

I can handle that. £30 I can't. To charge a fee for just having an account would be a breach of the ECHR laws. To charge for extra services like DD's SO's etc... would be perfectly legal.

I have no problem with that either. I'll use cash/paying-in books, just as I do now.

Mark7799 · 31 July 2006 at 4:47PM

A couple of points on this issue I have always wondered about.

1. I recall the change in the law, the repeal of the Truck Acts, but even before that, many employers had written into their conditions of employment that you HAD to have a valid account to be able to receive wages. Surely this doesn't breach the HR Act as especially if the employer was in the private sector, a) they wouldn't be subject to the act and b) no-one is forced to take a job with an employer. Incidentally, nothing says that it has to be a CURRENT account open to receive these salary credits.

2. (In response to LizD's post) Most people have no choice about the use of gas and electricity but we have to pay for those. Why would bank services be any different? I recall this was an argument put forward by the Banks to justify not introducing 'free' banking in the early 1980's and expect to hear it again in the near future.

dixie_dean_2 · 31 July 2006 at 4:52PM

How do you not have a choice over gas and electricity?

The banks are the greediest !!!!!!s in a world of greedy !!!!!!s! How can they justify these charges when they continually make record profits (see OP)?

Mark7799 · 31 July 2006 at 4:57PM

dixie_dean wrote:

How do you not have a choice over gas and electricity?

Sorry if I didn't make myself clear - I mean most people do not have a choice to use it - how many homes in Britain don't have it in some form or another?(and therefore have to pay someone for the privelege, they don't get it for nothing)

MPH80 · 31 July 2006 at 4:57PM

Hi Dixie - they can justify it because - on average - they make £1.05 a week off you.

HSBC, which on Monday announced record UK banking profits of £11.9bn, says that it makes a profit of £1.05 per week from each of its personal customers in this country.

The link for that quote is here: http://news.bbc.co.uk/1/hi/magazine/4781924.stm

grex9101 · 31 July 2006 at 5:00PM

Yeah, banks make money for their shareholders. That's a fact of life.

What I see happening is that the banks will indeed blame the reduction of "penalty" charges for the introduction of these account charges.

The point I would like to make is this:

Fair enough, the'y'll no longer be able to charge £25 (say) for a failed DD, but they will still charge £12 (almost half).

Now, for talkings sake, HSBC (for example) did make £2bn purely from penalty charges, and they have (say) 10m customers. Now they will make £1bn from charges, and if they charge all their 10m customers £10 per account per month, they stand to make a further £1.2bn - so they'll overall be up £0.2bn!

Ok, it's very shaky maths, and i'm sure someone far more intelligent will rip it to shreds, but the point is this:

THE BANKS WILL USE THIS OFT DECISION TO MAKE MORE MONEY FROM US, AND USE THE OFT DECISION AS THE EXCUSE!!!!

dixie_dean_2 · 31 July 2006 at 5:02PM

MPH80 - I'm not sure I see your point. Are you saying that as they make so little out of me they can make this charge?

Mark - Still not sure what you mean. As far as I know you don't have to have gas or electricity. People choose to. If you can only be paid by having a bank account, which you can only have if you pay a monthly fee, then its a bit different.

Free banking 'will be axed'

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