FCA 'won't stand in the way' of an end to free banking, says boss

badmemory

ZeroSum said:

Grumpy_chap said:

This little community on here who do this is pretty much the minority. Most people have just the one account & keep decent balances in them which doesn't earn any interest 

Due to the interesting way banks can sometimes behave, having only one bank account tends to be a bad idea.

masonic

I think it's been a long standing postion of the FCA and its predecessors that they wouldn't stand in the way of a model that ended the cross-subsidisation model that creates free banking. In the past, they have been positively supportive of customers paying a fair price for the services they use instead of indebted customers covering the cost of those who avoid paying debt interest and fees, or having the cost picked up by in-credit customers who are short-changed on credit interest. So this is not news and certainly no indication that there are any changes afoot.

EarthBoy

HappyHarry said:

Lightning360 said:

icsys said:

Looks like the City Watchdogs have paved the way for banks to charge customers for current accounts in an end to free banking.

The FCA have stated the regulator would 'not stand in the way' of banks opting to charge customers to hold accounts. 

While some providers already impose fees to maintain certain accounts that offer added benefits, the majority of current and savings accounts are fee free.

This is, apparently, in response to the banks being concerned about spiraling costs in the wake of regulatory changes.

Maybe more truthfully they want customers to off-set the massive bills they face to compensate consumers who were mis-sold and overcharged for car finance.

Wouldn't take much for one bank to not charge fees and have customers flock to them

That’s what started free retail banking in the first place. I think it was Midland Bank (now HSBC) that started free current accounts.

No it was not.  This statement keeps being quoted online, but it's not true.  Midland was only the first of the big four banks to offer free banking; a lot of the smaller banks offered free banking for donkeys years before Midland thought of it.  TSB, Williams & Glyn's and Yorkshire Bank, for a start.

Nasqueron

ZeroSum said:

Grumpy_chap said:

[Deleted User] said:

Even in markets where there are fees (e.g. USA) a large number of providers waive them for certain balances or deposit salary payments.

Oddly I was going to mention the accounts that require a certain amount to be deposit each month as a driver towards scrapping free banking.  That view is based upon the threads that appear in these forums by people who hold several of these accounts requiring £x deposit every month and having income much less but cycling the same money around the several accounts in a never-ending loop just to meet the qualifying criteria.  All those transactions don't generate the banks any revenue yet all cost to process.

This little community on here who do this is pretty much the minority. Most people have just the one account & keep decent balances in them which doesn't earn any interest 

It's worth adding to that, since September 2013 (to Jan 25 this year) over 10m switches have happened. Even if we pretend they are all unique, with the UK population around 67m (2021 ONS estimate) of which 14m are kids (UNICEF 2023 estimate) that's basically less than 1:5 of the population switching 

[Deleted User]

Grumpy_chap said:

[Deleted User] said:

Even in markets where there are fees (e.g. USA) a large number of providers waive them for certain balances or deposit salary payments.

Oddly I was going to mention the accounts that require a certain amount to be deposit each month as a driver towards scrapping free banking.  That view is based upon the threads that appear in these forums by people who hold several of these accounts requiring £x deposit every month and having income much less but cycling the same money around the several accounts in a never-ending loop just to meet the qualifying criteria.  All those transactions don't generate the banks any revenue yet all cost to process.

People have different attitudes to finance.

I have a core account and have others for other reasons e.g. Chase for US travel. Others take virtually every offer going and others have one or two current accounts. New perks and charges would shake this up even more.

adamp87

I would expect a lot of pressure from the government to stop this ever happening to be honedt

amanda1024

adamp87 said:

I would expect a lot of pressure from the government to stop this ever happening to be honedt

I think there would be pressure to keep 'basic' bank accounts available for free. Many non-basic bank accounts already have fees at various levels, with commensurate cashback, perks etc. available in exchange; I don't think the government is bothered about that at all, as long as fees are fairly clear upfront.

Doshwaster

adamp87 said:

I would expect a lot of pressure from the government to stop this ever happening to be honedt

Certainly no chance of it happening this side of an election but then there will be 4-5 years until the next one so anything could happen especially if branches keep closing.

The basic truth is that banks just don't make money on most personal current accounts so they are run as a loss-leader. People want top quality customer service but don't want to pay for it. I can see a regulation for free basic accounts for some groups (children, pensioners etc) but perhaps charging would increase competition and service improvements. 

If charging came in then I would probably be prepared to pay a few pounds a month for a main account but I would get rid of the secondary accounts which I have open. 

jameseonline

badmemory said:

ZeroSum said:

Grumpy_chap said:

This little community on here who do this is pretty much the minority. Most people have just the one account & keep decent balances in them which doesn't earn any interest 

Due to the interesting way banks can sometimes behave, having only one bank account tends to be a bad idea.

I have a collection of accounts for various reasons:

1) What if 1 bank goes down preventing access to money, although it doesn't tend to happen often it has happened before. Also might be an idea to get an account with a bank that's not part of the same banking group just in case each bank of the same group goes down.

So have an emergency fund somewhere else incase you can't access your main account.

2) To access as many savings accounts as possible.

New ones keep coming up, the more places you are already with the easier it's going to be to get (in theory).

In my experience you really don't need to put much money in current accounts, savings accounts etc just something to protect a profile, because you've put in an effort to get a current account or savings account in 1st place.

You then free to move money around.

Ditch & Switch kind of thing but having a tiny amount of money in an account and moving majority of money out.

By protecting a profile I mean have at least 1 account with a bank/building society/savings app etc.

If you don't keep at least 1 account with a company you'll lose access so have to go through the hassle of re registering for an account, telephone/online/mobile banking etc should something good suddenly come up you can quickly go for it because you already in the system 

3) To access any perks such as cashback, Disney plus etc.

4) For budgeting , so direct debits for example in 1 bank, Tesco shopping with Tesco Bank perhaps.

5) For moving other money around between accounts. So money goes into a instant access account until needed then transferred out to regular savers, to do shopping, pay direct debits etc.

*Yay I've been promoted and can edit posts😃*

Kim_13

Would they be allowed to say you can’t have X savings account without having a current account if you had to pay for said current account?

I agree with the comment that people are basically obliged to have two current accounts now - especially as with branch closures, often it’s not a reasonable distance to expect someone to travel at their own expense having been told they can only have access their wages/benefits upon production of ID at a branch. You should only be out of pocket if you’ve actually done something wrong.