HSBC now charging £5.50 a month for "free" Business Banking

anoncol

So why do businesses expect free banking?

anandp

As there has been free business banking offered by some in the recent past.

pmduk

But don't those same businesses expect their customers to pay for the services provided? Lawyers, accountants etc don't provide free services. Why should banks be expected to subsidise a business?

JuicyJesus

pmduk wrote: »

But don't those same businesses expect their customers to pay for the services provided? Lawyers, accountants etc don't provide free services. Why should banks be expected to subsidise a business?

Because banks are special and don't get to charge for anything they do because PPI Goodwin mis-sell Fred The Shred bailout scam ruined the economy.

Come on, keep up.

anandp

pmduk wrote: »

But don't those same businesses expect their customers to pay for the services provided? Lawyers, accountants etc don't provide free services. Why should banks be expected to subsidise a business?

They're not providing free services. Providing a bank account may cost them but they make that up through profits achieved in other ways.

E.g. no interest bearing accounts so free money for them to then use to lend (on a multiplier basis not 1:1). Many businesses provide 'free' services which are effectively marketing costs to then up sell/cross sell during that customer's lifecycle with them.

Caladan

anandp wrote: »

They're not providing free services. Providing a bank account may cost them but they make that up through profits achieved in other ways.

E.g. no interest bearing accounts so free money for them to then use to lend (on a multiplier basis not 1:1). Many businesses provide 'free' services which are effectively marketing costs to then up sell/cross sell during that customer's lifecycle with them.

The kind of business that would make the bank a profit if they gave the business free banking is also the kind that isn't going to blink at £5.50 per month. I.e. an active, trading business with additional needs such as borrowing, card processing facilities etc.

Businesses putting 1 transaction through per month (or 1 every 3 months I think one guy said earlier!?) are hardly good custom, but they still cost in terms of producing statements, cards, cheque books etc for no benefit.

If you had a client who constantly cost you money, wouldn't you seek to recoup that cost somehow? Either through increased charges or by dropping the client - This is a question to any business.

Edit: This next statement is a pure 100% unsupported guess, but since most high street banks are charging now, perhaps HSBC have decided to also charge to prevent all those low income customers coming over and opening accounts with HSBC to escape the fees, leading to a mass influx of costly accounts to run with little increase in income.

Just a thought!

pmduk

JuicyJesus wrote: »

Because banks are special and don't get to charge for anything they do because PPI Goodwin mis-sell Fred The Shred bailout scam ruined the economy.

Perhaps you've been reading too many of PQRDEF's inane rants?

JuicyJesus

pmduk wrote: »

Perhaps you've been reading too many of PQRDEF's inane rants?

Well after doing so and slamming my head into the desk, I did have to agree with him that overdraft charges OFT bank's fault CIFAS credit scoring PPI cross-selling.

anandp

Caladan wrote: »

The kind of business that would make the bank a profit if they gave the business free banking is also the kind that isn't going to blink at £5.50 per month. I.e. an active, trading business with additional needs such as borrowing, card processing facilities etc.

Businesses putting 1 transaction through per month (or 1 every 3 months I think one guy said earlier!?) are hardly good custom, but they still cost in terms of producing statements, cards, cheque books etc for no benefit.

If you had a client who constantly cost you money, wouldn't you seek to recoup that cost somehow? Either through increased charges or by dropping the client - This is a question to any business.

I agree the ones putting one transaction through per month are hardly good custom, but in the few cases I know of where a small or micro business has been affected by this change, they've actually incurred at least one unauthorised OD charge too in the past 12 months (including one for me, though that was over a year ago).

So they may well be getting income from other charges which these smaller, less transactional businesses are probably more susceptible to.

Another example: I have two accounts with HSBC. One I don't care particularly about spending the £5.50 but for the other I do. In this scenario, I'm considering moving (though don't know to who as can't find alternatives) so they could lose one which borrows and one which is costing them.

And another thing to bear in mind is that those that are worried about this and still small, may well one day become the ones that go to them for business loans. Its like how VC's work: out of 10 investments, they expect 1-2 to outperform considerably which would more than make up for any losses on the other 8-9.

BusinessIsBusiness

anandp wrote: »

I agree the ones putting one transaction through per month are hardly good custom, but in the few cases I know of where a small or micro business has been affected by this change, they've actually incurred at least one unauthorised OD charge too in the past 12 months (including one for me, though that was over a year ago).

So they may well be getting income from other charges which these smaller, less transactional businesses are probably more susceptible to.

Another example: I have two accounts with HSBC. One I don't care particularly about spending the £5.50 but for the other I do. In this scenario, I'm considering moving (though don't know to who as can't find alternatives) so they could lose one which borrows and one which is costing them.

And another thing to bear in mind is that those that are worried about this and still small, may well one day become the ones that go to them for business loans. Its like how VC's work: out of 10 investments, they expect 1-2 to outperform considerably which would more than make up for any losses on the other 8-9.

That's the point isn't it. By charging a fixed fee HSBC are creating a clearer pricing structure rather than recouping costs form authorized usage etc.

Santander's position, albeit slightly different was exactly this. The A&L/ Abbey business accounts may be free, but unauthorised fees are extortionate, as well as the rates for ODs etc. The reason Santander wanted to move everyone over wasn't to get one over on small businesses. It was to offer a more compelling proposition to grow its customer base and in turn offer even better products for more customers to come on board. Obviously profit is important. But what is actually more important for Santander is diversifying the balance book and increase its SME market share...

Before charging, Santander's customer base was stagnant, largely customers using the free banking for paying money into the PO and day to day banking elsewhere. Expensive and not sustainable. Now the bank has invested in hundreds of Business Managers, in credit interest on current accounts, market leading interest rates on savings accounts, competitive OD fees etc etc.

Customers happy with the free banking kept that, but they are the ones paying in other ways..

What makes me chuckle is those on free banking changing entity. As such they need a new account and cannot apply for the old free accounts as it is something that isnt offered anymore. Yet they are up in arms. In the same breath they say they changed entity to save money on tax. LOL WHAT? Some people need a dose of reality. All businesses make business decisions for a reason.

Unless everyone here happens to be a senior retail bank business manager in HSBC, they do not know how and why the decision was made. The ultimate fact is business banking as a free proposition is- in the main- no longer offered in the UK market. If you cannot pay a reasonable fee for a service integral to most active businesses, then there is an issue bigger than this with the business.