MSE News: Call to end free bank accounts

Pugwash69

I already pay for my current account. You don't think I get all of the interest that the bank earns on my money do you?

Consumerist

DaleN wrote: »

That's all very well if banks did reduce overdraft charges at the same time they introduced account charges, but why would they if they could have both, and sanctioned by the regulator too? Oh I'm sure they would reduce the charges initially to gain some acceptance, but give it a few years and they'll creep back up. One might argue that competition between banks would keep this in check, but look how well competition has worked so far: it's only down to £12 now because of the massive reclaiming campaign spearheaded by MSE.

I take your point subject to some caveats.

The regulator does not "sanction" the level of bank charges because these charges are not within the regulator's remit to regulate.

The reason, I think, that competition has not worked is because we, the customers, do not exercise our right to change banks if we are not satisfied with their charges. This has resulted in the banks competing only to see just how high they can set their charges before anyone notices. Only when there is a public outcry do they know they have taken it as far as they can for the moment. A similar situation applies in the energy market.

Butterfly_Brain

So the greedy banksters are still bleating poverty, even after raising mortgage rates way over the base rate. Bet they still think that they are entitled to their bonuses, guess what not from me anymore.
Fine then we can all go back to using cash and then companies will have to take cash for their bills instead of direct debits, result less money kept in banks... I already take everything out apart from direct debits every month and have managed to save over £800 by seeing where every penny goes . If we all did this it would hurt them much more than moving account.

grumbler

He (Andrew Bailey) says regulatory intervention may be the only way to bring about change as it would be hard for a single bank to break ranks without losing business.

The mostly idiotic 'intervention' I've ever heard off. This smells like Brussels.

In his speech to the Westminster Business Forum, Bailey adds: "I also worry that the banks may not properly understand the costs of products and services they supply.

Poor banks... They do need Mr Bailey to teach them a lesson on the cost of services they supply.

"And I worry also that this unclear picture may have encouraged the mis-selling of products that is now causing so much trouble."

What misselling? I have never heard of any misselling with regard to a free current account.

Lokolo

grumbler wrote: »

What misselling? I have never heard of any misselling with regard to a free current account.

I think what he means is, that because current accounts are free they are trying to make money other ways, such as selling over expensive, useless insurance.

If they charge for current accounts, they can reduce profit making products elsewhere (such as expensive, useless insurance).

rogerblack

Scarpacci wrote: »

Services being paid for by those who fail to follow this rules is a bad thing?

It is a _LOT_ easier to follow the rules, if you have an adequate income, are literate and numerate.

And to be clear - these are not services being paid for.
These are penalties, which exceed the cost of the services, and subsidise other peoples accounts.

It would make as much sense to charge people with larger bank accounts more, as it takes more ink to print them.

grumbler

Lokolo wrote: »

I think what he means is, that because current accounts are free they are trying to make money other ways, such as selling over expensive, useless insurance.

If they charge for current accounts, they can reduce profit making products elsewhere (such as expensive, useless insurance).

I see what you mean, but what he offers is a very exotic cure. If banks start charging for the current accounts, why will they stop making the same profits 'elsewhere' if they still can make them?

Lokolo

grumbler wrote: »

I see what you mean, but what he offers is a very exotic cure. If banks start charging for the current accounts, why will they stop making same profits 'elsewhere' if they can make them?

Ha I wouldn't suspect so.

davidfree007

I bet if we were able to trace this story back we would find it came from who.... hmmm, the banks themselves....

this seems to rear its ugly head every once in a while, as someone somewhere thinks its a clever way to get hold of more of our money...

The current system works, and it means people on low pay have easy access to banking services without having to stump up more of their hard earned cash for the privilege.

What is it with our govt and constantly trying to rock the boat. We actually have something that works and works well in this country! Leave it alone!:mad:

antonia1

Consumerist wrote: »

The reason, I think, that competition has not worked is because we, the customers, do not exercise our right to change banks if we are not satisfied with their charges. This has resulted in the banks competing only to see just how high they can set their charges before anyone notices. Only when there is a public outcry do they know they have taken it as far as they can for the moment. A similar situation applies in the energy market.

I believe there is a (really quite likely) possibility that lots of people don't exercise their right to change banks very frequently simply because they aren't charged outright for their accounts. When someone gives you something for free it creates a remarkable sense of obligation to return the favour. It is part of how the "free sample" marketing strategy works, and customer loyalty schemes.

If we started to pay for our banking, the sense of obligation would be removed, and we would start to see ourselves as consumers of banking services. This would lead to people demanding more from retail banking providers, and moving when they aren't happy. Why move away from a poor service when it is "free" anyway? Equally, why stay with a poor service if you are paying £5 per month for it?