MSE News: Call to end free bank accounts

Scarpacci

rogerblack wrote: »

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

Perhaps, but there are more suitable products out there (basic bank accounts) for those who might struggle with money. Those who choose to have a regular bank account with overdraft facility should be comfortable taking responsibility for maintaining their account.

rogerblack wrote: »

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.

They are service charges that go along with the account for additional services. I believe part of the reason the overdraft fee is "only" £12 or so, is that the banks are prevented from applying solely punitive measures.

Strictly speaking, there is no difference between a bank charge for going overdrawn and a bank charge for processing a foreign cheque - it's a fee for a service not included in the "free" package. It's really no different to a mobile phone company charging more for texts outside limits or for extra data usage.

rogerblack wrote: »

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

But the banks already make heaps of money from people with large bank accounts because they can loan that money out with a significantly higher interest rate.

More ink or not, there's no way customers with larger bank accounts are costing more than the people who keep going overdrawn and don't expect to be charged for borrowing money without authorisation.

Ultimately ending free banking seems to be a way to stick it to the people from whom the banks already make money, who act responsibly and follow the rules. Those who try to do the right thing being screwed yet again. Whose side are the regulators really on? I don't think it's the side of the typical person.

Consumerist

MacMickster wrote: »

Now that it is all but compulsory to operate a bank account in this country, introducing legislation insisting on charging for the privilege would be a big vote loser.

Introducing regulation to insist on charging fairly would be a vote winner, I think. It seems reasonable to me that the first few transactions each month should be free. As we are virtually forced to use the banking system, by government and employers alike, the cost of getting at our pay or benefits should be borne by the government and employers whom it benefits. e.g. some kind of payroll charge.

Without legislation, customers will continue to vote with their feet . . .

The facts don't bear this out; we do not vote with our feet in any great numbers and this is why the banks get away with naming their own price for their services.

cepheus

I already pay at least 3% a year for my current account due to the devaluation of any balance through inflation. I think any account which pays x% less than inflation should say on the statement and advertising blurb 'money left in this account will be worth x% less every year in real terms'. Similar for other accounts. Also they should not be allowed to call it a savings account unless it exceeds inflation over the last year.

Toe-Jam

Another stupid suggestion by someone who obviously wouldn't miss £10-£15 from their account every month.

But there are plenty of people out there for whom it would make a big impact.

gt94sss2

rogerblack wrote: »

At the moment, in many ways - people on benefits and low incomes _are_ subsidising the better off.

A generalisation, admittedly.

But I think it would be interesting to find out what the breakdown of charges (late fees, unauthorised overdraft charges, ...) by income is.

I think there was some work done on this some time ago - it actually found people on poorer incomes paid fewer charges overall as they were better at managing their money..

Personally, I'm not sure this person should be the new regulator if he holds these views and they influence his decision making..

Regards
Sunil

rogerblack

gt94sss2 wrote: »

I think there was some work done on this some time ago - it actually found people on poorer incomes paid fewer charges overall as they were better at managing their money..

The obvious question then arises of relative affordability of the charges - but thanks, I'd not seen any studies at all.

KTF

CoolHotCold wrote: »

This will be a unpopular marketing exercise for any bank that does it first.

The Santander 1-2-3 account doesnt seem that unpopular given that its charges you a fee each month as this is offset by the cashback which is how I imagine this will be implemented by other banks if they are forced to do this.

Azari

In what universe does this moron believe that charging for bank accounts would stop banks trying to make money in other ways?

A bank is a business and a business that will always try to maximise it's profits. It would merely see charging for accounts as a new profit stream.

The only way to achieve what this idiot seems to want to achieve is to legislate that clearing banks must be separate businesses run completely independently of the current bank's other interests.

And that's not going to happen.

nomoneytoday

Why should I have to pay for banking?

I've never ticked a PPI box, had an unauthorised overdraft (plenty of authorised ones over the years), or incurred bank charges. The bank gets the use of my wages on 1st month too

InsideInsurance

He is presumably in the world which says that if you are giving away a service for free that you are creating more pressure to sell something else just to break even. A loss leader only works for a business if it does actually lead to something, otherwise it is simply a loss.

If you sell all products for a profit then the pressure is off to try and ensure that the ratio between free and paid for services/ products are correct. Does that stop profiteering? Desires to increase profits? Of cause not but if you look at any adherence to regulations etc you will see a strong trend that as things become more desperate then the adherence to regulations also goes down.