MSE News: Santander to charge for 'free' business accounts

Paulgonnabedebtfree

Paulgonnabedebtfree wrote: »

OK then. I see that there is mention of Santander being allowed to alter their T & Cs - a right that I am in agreement with if changed within the scope of "free forever.". My argument is that the word "forever" supercedes those T & Cs.

Please bear with me while I come at this from a slightly different angle - one that I would probably argue in a tribunal if it were to become necessary:

For a moment, let's put the word "forever" aside.
Let's assume instead that the offer from Santander had been two years free business banking if staying within certain transaction limits. Then, after one year, they announce that they will start charging £7.50 per month from month 14. They use the argument that they may do this as they have altered their T & Cs.
Could someone who is in favour of Santander being allowed to end "free banking forever" say if (a) they think Santander should be allowed to start charging from month 14 and (b) how my fictitious 2 year/14 month scenario varies, in principle, from the "free forever" scenario.
Is my fictitious scenario different because it mentions specific lengths of time? If it is different, at what point between 2 years and forever does Santander's behaviour become acceptable? Please give reasons.

Not trying to catch anyone out here or start a keyboard war. Just using a different scenario in the hope that it makes my point clearer. Also, it's just possible that someone may produce a quality argument that let's me see that I've been in error.

LOL. I thought I made an excellent point on the bit I've highlighted and was hoping someone would follow up on it Ah well. Maybe I'm not as brilliant as I thought (laughing at myself here).

So, another fictitious scenario. Santander start a new credit card. It has an introductory offer of 4.9% for life of balance on new transfers until the transferred balance is paid off in full. Joe Bloggs has a fair bit of debt on other cards and decides to save himself some money by transferring £5,000 to his shiny new Santander card. Because the interest rate is low, he is happy to use it as long term debt and isn't to bothered about repaying quickly. After x amount of time he has reduced his debt level to £3,000. Santander write to him to inform him that they now wish to change the T & Cs governing this debt and that his interest rate will rise to their standard SVR in 60 days. That's OK then, is it?

JuicyJesus

Paulgonnabedebtfree wrote: »

So, another fictitious scenario. Santander start a new credit card. It has an introductory offer of 4.9% for life of balance on new transfers until the transferred balance is paid off in full. Joe Bloggs has a fair bit of debt on other cards and decides to save himself some money by transferring £5,000 to his shiny new Santander card. Because the interest rate is low, he is happy to use it as long term debt and isn't to bothered about repaying quickly. After x amount of time he has reduced his debt level to £3,000. Santander write to him to inform him that they now wish to change the T & Cs governing this debt and that his interest rate will rise to their standard SVR in 60 days. That's OK then, is it?

If it's in the original terms and conditions that the transferred balance will be at that interest rate for the life of the balance, with no get-out clauses, then they'd have a tough time with that holding up with the Ombudsman at the very least.

What did the T&Cs on the supposed "free banking forever" account say?

psdie

Another SME Abbey customer here, signed up in 2006 on the promise of "free banking forever", disgusted to see Santander breaking both that promise and their promise that nothing would change for Abbey customers when they took over.

I notice everyone is talking about £7.50pm - in fact it's likely to be higher for most businesses, as that only "entitles" you to deposit £1k/month - I'm quite sure even micro businesses turn over more than £12k/year! Seems misleading to me that Santander claim "most" businesses will pay the £7.50 rate - but no surprise there.

So in fact most are more likely to be paying £12.50pm (£150/year), which is the next available tier. The exception would be if your turnover is < £24k/year, in which case it's slightly cheaper to pay £7.50pm plus 50p per £100 of income over £12k - e.g., £18k = £10pm.

Disgruntled2012_2

Some of this is a matter of principle. We were told 'free banking forever' and now we are told we are going to have to pay for it.
£90 a year isn't much it is tax deductible. I have been a driving instructor for 14 years the last 2 or 3 work is in decline pupils will go elsewhere to save £1! So i'm closing my business account and opening up a private account I have small in/out goings.
Free for ever should mean just that and I agree with people with very small income that £90 Minimum a year is just an unwanted cost.
When I complained to Santandar they said it was going to improve my business. How I don't know! I told them it was just an unessential cost that was just not going to achieve anything.
I like to be able to pay in on a Sunday morning I can stop outside the cash point but half the time it isn't working so have travel several miles to the next one. So time for change and see what happens.

cashisking1

deleted by user

Little_Miss_Moneysaver

Susievintage wrote: »

In response to a request, I am about to paste in the text of the letter that I sent yesterday to Santander (and I sent it to Santander Business Banking, Bridle Road, Bootle, Merseyside, L30 4GB). PLEASE do not just cut and paste this text - I'm not being precious, but it's just that our letters will not have the same impact if they are all identical. Please feel free to model yours on mine, but do make it different so that it sounds like a personal concern rather than an orchestrated campaign!

Here goes:

Dear Sir/Madam

In October 2003, I opened a business banking account with Abbey National, and chose the account because it was promising “Free Business Banking Forever”. The confirmation letter I have from David Lamb, manager of the Abbey National Business Banking Centre, dated 15 October 2003, says this: “Your business Bank Account has been opened on our Free Banking tariff”. The tariff sheet enclosed with that letter has a section entitled “Free banking forever”, which says: “This tariff offers free banking forever for businesses operating within specified transaction limits.” There is a footnote to this, which says: “Subject to relevant changes to the law, regulation or the imposition of any tax in connection with bank charges.”

As you know, Abbey National became abbey, and then Santander. Throughout these changes, my account remained the same: same account name, same account number, same sort code, same free banking.

Yesterday, 16 July 2012, I received a letter from Robin Foale, MD of Santander Business Banking. This letter says: “Our business strategy has to change…. Over the coming months your Business Current Account will be transferred to our award-winning £7.50 fixed monthly fee account.”

I am of the view that this is not permitted. I was promised and signed up to free business banking forever, and the introduction of charges now announced is not in answer to changes in law, regulation or taxation – the only circumstances mentioned in that explanatory footnote. The FSA also says that this sounds wrong, and on their instruction I have made a formal complaint under their Handbook, specifically under BCOBS 2.3 (Other general requirements for communications and financial promotions).

The resolution I seek is an undertaking from Santander that the account I hold will continue to operate according to the terms on which it was sold to me: free business banking forever.

I would be grateful if you could look into this matter for me.

Hi,
Another Abbey Free Business Banking Forever customer since 2007 here. I haven't received my letter yet, but thank god for the martin's email and this forum which has given me the heads up on what's about to happen.

I've just spent the last 3 hours reading all the posts on this forum, and it's totally been worth my time, reading everyone's views.

Firstly, thanks so much for posting a copy of your letter. I shall write also write a strongly worded, articulate letter to Santander, and then to the Ombudsman, after the inevitable fob-off from Santander. I'm sure reading your letter has given many others the courage to write their own letters.

I agree with someone else's post also - the £7.50 is only going to be applicable to companies with a very small turnover. The rest of us will be paying much much more - £20 to £40 per month in bank charges.

I never did understand why business banking had charges but basic personal accounts didn't have them. I asked my accountant who simply said it's just a way for banks to make money, and told me to be lucky I had the abbey account which was "free forever", as back in 2007, none of the other banks were offering the "free forever". So, i chose it for that reason, and put up with the fact it was an on-line service only (no counter help, etc).

My business does about £220k turnover, depositing about £3-4k cash per month, majority by bacs payment from the credit card machine provider, and a few cheques.

Some would argue that a "small charge" of £20-40 isn't going to cripple my business, however I would strongly argue back that it's by watching the pennies, and being as careful as possible with overheads that my business has reasonable cash stores in the bank. It's also the reason i can charge a lot less than the competition, to my customers - and they win as a result of it also. And it's the principle of the whole thing - i was sold a product with the T&C of "free forever"...

This monthly fee would start eating into that, which means i'll have to raise my prices to my customers - which is not something i'm keen to do during these economic times.

The banks are slimy and unscrupulous, and we can't keep letting them get away without a fight. If we do, the charges will only keep rising with time, to ensure the banks get the profit they want. If Santander get away with this one, it will set a precedent for all the others.

I shall also be keenly tuning into moneybox (after also voicing my complaint) to see what they suggest.

As for alternatives, the Abbey account we all had was a gem. I will look into the Co-op and HSBC one.

I also read up on the ING Direct Business Savings Account - has anyone else tried it? New product, only a couple of months old. I think only 10 cheques a month allowed, no cash deposits, and unlimited bacs transfers (don't quote me on that - i read up on it last week and relying on memory). The only problem with it is that it requires a linked account - i.e. santander to operate it, so the problem with the monthly charges still remain. So, i may move all my credit balances £££ out of santander (which gives me hardly any interest) to ING - just a bit of healthy revenge on santander...

Daz67_2

I have spent some time reading through the numerous comments from people in response to the news of Santander’s introduction of bank charges on it's (presently) free business account. I may have totally missed the point,but frankly I'm wondering what all the fuss is about. Here are my thoughts on the subject. I myself am a Santander business account holder.

The first thing is that bank charges are a cost of running a business, and as such are tax deductible. Google the subject, there is plenty of information available freely on the net.

Secondly, and being completely honest, what difference is £7.50 a month really going to make to your business? If £7.50 a month is going to bring your business to it's knees, then perhaps your business plan needs looking at. Is it a business at all or just something that you spend time on that doesn't actually pay it's way?

That may sound harsh, but what I am saying is that if your business survival hinges on whether Santander charges you £90 a year, then maybe as a business person, you need to do some soul searching.

Even if the figure turns out to be at the higher end - £40 amonth, it’s still tax deductible and probably less per month than your mobile phone contract (which will also be tax deductible!).

I meet and speak to people every day who can't afford this or don't want to pay for that, but are quite happy to find the money to pay £50 a month for a pointlessly complicated mobile phone that tells you the temperature in your area when you ask it the question. I get that information for free - I look out the window.

This is called human nature. People are happy to pay stupid amounts of money for pointless gadgets but then jump up and down when they are asked to pay towards the cost of the very thing that allows their business to function. Try running your business without a bank account, whoever provides it.

Anyone who runs a business has to make decisions that affect their business day to day, including how best to choose the services it requires to function. As with any service, if you don't like it, then look for something else. Don’t waste time moaning – go elsewhere.

Santander is a business and it has made a business decision that in return for paying staff to man it’s call centres, providing me with cheque books, plastic cards, internet banking etc etc, then it’s going to charge me £7.50 a month. Sound’s pretty fair to me.

People have short memories. It wasn’t so long ago that business people had to spend endless hours in queues at banks to conduct banking business. Now I can do pretty much everything I need to via online banking in the time it takes to press a few buttons. No finding somewhere to park, no queueing, no filling in forms ….etc.That alone saves me hours of time every month that I can use to build my business.

Before you say that I’m a Santander stooge just trying to play things down, you’re wrong. I was made redundant several years ago and since then have spent every hour I can starting a business from absolutely zero. It is now starting to pay it’s way and I’m hopeful for the future. If I had spent endless hours on something like this I wouldn’t have a business or an income to talk about.

How many business people provide their services for free all of the time? None I would wager. That’s not a business, it’s a fast path to failure. If I get something for free, for however long, I count myself as being lucky. I don’t expect to get things free forever.

Sometimes you have to pick the battles that are worth fighting, and frankly, for £7.50 a month, I don't see this as one of them. As a sole trader, my time is spread very thinly indeed and I have to decide how best to use that most precious of resources.

Do I spend time getting hot under the collar, playing to an empty theatre, or do I spend my time doing all the things that make a business successful - gaining new business, making sure my website is current, checking out the competition to stay one step ahead, targeting my advertising, managing my figures to know what is profitable and what isn't.

If I were so inclined to jump on the band wagon and spend my time complaining here there and everywhere, I'm pretty sure that if I paid myself for all that time spent, that the figure would far exceed what I would be charged in account fees. It may make a point, but makes no business sense at all.

The one thing I know we all have in common is that we are big fans of Martin and his excellent website. If I see a hassle free offer that will save me a few quid on something useful, then that’s great. But if that same offer involved me spending £50 of my time filling in forms to save a fiver, then I walk away.

There are loads of things that wind me up. Chewing gum on the pavement. People throwing litter. Bankers bonuses. Bad language. Petrol prices. Gas prices. Electricity prices. The list is endless, but how much time am I prepared to waste to make a point? Absolutely none is the answer. My main focus is to make sure that my business succeeds so I can provide a standard of living for those I love.

Yes I know there is a principle at the heart of this argument, but is an argument over £7.50 a month really worth getting into? In the cold light of day, isn't the sensible thing to focus your energy on raisingyour game, delighting your customers and generally managing your business? The cumulative pay off from devoting your time to these, and similar activities, has surely got to amount to significantly more than £7.50 a month?


Think about it.

juliusceasor

I believe the thrust of your post has been covered by several other posters myself included. You're entitled to your view, but consider a dripping tap, it can still cause flood damage.
Allowing the drip drip drip of erosion of T & C's amounts to the same thing.
I will consider moving to a paid for account or a free one, but I will move if they introduce this charge because it is break of trust and faith in the original agreement and a point of principle. And this is what many are pointing to as well as the unexpected cost they now have to factor in to their prices.

neverpayanyinterest

Possibly a way of reducing the cost of banking cash would be to pay it into your personal account and then bacs it into your business account

madonnamustache

Letting banks do whatever they want is not on.

Did not get the dreaded letter, but I just phoned them and they have confirmed that ALL business accounts will have a fee attached to them. I called them on 01908 237968 instead of using the 0845 number and they can put you through to the switchover department there, where you can log a complaint. They will tell you how this is "benefiting their customers" and point you to some section 16 in their Ts&Cs, but there is really no need to get into any arguments with them. They will not be able to change anything. They can, however, log a complaint for you regarding the new fees. I was not given a reference number, but I wrote down the advisor's name and the time and date we spoke. They should send a letter out within a few days with a reference number, confirming the complaint.

I have also used http://www.writetothem.com/ to email my MP and a lord from the House of Lords.

Will take it futher to the FSA/ombudsman later.