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

MattMattMattUK

Bridlington1 said:

MattMattMattUK said:

subjecttocontract said:

Some of us prefer paper copies don't you know.
We don't all have printers or smart phones !

The point is that if you want that and banking costs were to be transparent you should be charged for that. Probably around £1.50-2.50 per statement 

My only issue with that would be scenarios where you need a statement but the bank is unable to supply pdfs. I'm in the process of buying my first home and have had to get hold of the last 6 months of bank statements from my various accounts, which include my name and address.

For many of the savings accounts I've yet to receive a statement so have had to request that one is generated. Despite getting paperless statements and explicitly requesting a pdf statement be generated, some banks (Santander, Nationwide, First Direct etc) were unable to send custom pdf statements and instead sent paper ones (First Direct insisted on providing both for some reason), despite many others (Monmouthshire, NatWest, Coventry etc) being able to generate custom pdf statements which include your name and address whenever you like. In this scenario it could be considered to be unfair to charge for a paper statement if the bank can not produce a pdf version.

That should be easy to resolve, banks should be required to produce electronic statements, in fact with modern technology there is zero reason for them to not be available on demand (perhaps with a lag of a few working days for pending transactions).

Bridlington1 said:

MattMattMattUK said:

I have no problem with banks charging, overall it would make more sense, full transparency and every service and transaction chargeable. We are an outlier in European terms in that, where the banks in most countries charge a few cents for various transactions, a bit more postal statements, cash handling etc.

Personally I'm quite happy for us to remain an outlier compared to the rest of Europe. I think the basic things such as sending/receiving faster payments, paying out DDs, using a debit card aught to be free, particularly if we are going to move to a cashless society in which holding a current account in one form or another becomes more essential.

By all means charge for additional items though, such as receiving paper statements where the customer banks online and has the ability to generate a custom pdf statement whenever they wish, ability to receive certain offers such as cashback, exclusive savings products, insurance benefits etc and wasteful/excessive requests such as if someone decided to do a DSAR every week etc. They could also possibly make some cut backs such as making physical debit cards an optional extra etc.

They are not free though, the cost is just hidden, the point is if they were charged for then the cost is transparent and they would not be cross subsidised by lower interest rates on savings, higher rates on borrowing etc. As an example I have friends in Germany, The Netherlands and France, the fees are not huge, but do reflect the real world costs, they said around €10-15 a year in admin fees (per transaction fees), very low fees for debit cards, slightly higher (be few cents) for credit cards, but most non-bank branch ATMs charge, a new bank card costs €10-20, paper statements are around €2, there are fees for going overdrawn and doing it more than three times in a year will mean that the account is closed (overdrafts are rare in Europe). They key point is the fees are clear, up front and everyone knows what they are, rather than hidden in the cost of other services, cross subsidised, free banking for those who pay more in, but fees charged for low earners etc. (although some banks offer an all you can eat model for a monthly fee, and in Germany they will often waive them for a monthly deposit over a certain level, but that level is normally only €700).

Nasqueron

steven141 said:

Bridlington1 said:

steven141 said:

If banks started charging for every account, I would probably close a lot of my secondary accounts. 

I currently have the following current accounts:

Royal Bank of Scotland x 1
NatWest x 1
Ulster Bank x 1
Nationwide x 2
Lloyds Bank x 1
Chase x 1

I also have 9 savings accounts and 2 credit cards.

I know that this seems excessive but the NatWest and Ulster Bank accounts opened for the switching deal and I'm keeping them and going to use them in some way as an appreciation for my £600 I gained from NatWest Group. 

The rest all have their purpose in some way  

Excessive? I think I'd probably go round the twist if I had so few accounts.

I've currently got 14 current accounts (assuming I've counted correctly) plus over 100 savings accounts, 4 credit cards and some investment accounts left over from free investments I've had. 

There was me thinking that I had a lot 😂 it’s easily done though when trying to switch accounts. I don’t even want to know how many bank accounts I have closed on my credit file, last I checked I think it was heading towards 40 I think 😱 this surely can’t be a good thing. I just wish that credit files wiped after 3 years and not 6 years. A lot can change in 6 years. 

3 years would be far too enticing for nefarious types to skip out on their debts and then hide their past - that's the reason for it. 6 years (5 in Scotland in some situations) is the standard also for things like debt enforcement, statute barring etc so makes sense you can see your credit history for the same period. Opening and closing current accounts, without an OD, is generally neither here nor there, it's not great just before something like a mortgage application but after a year or so, it's largely immaterial for credit checks.

Kim_13

Other institutions would also need to be mandated to accept said electronic statements when they themselves were required to verify a customer’s identity/source of funds. Currently it seems to be left to the bank to decide to accept or not based on their own interpretation of what the regulations require of them.

Grumpy_chap

We, the public, are a fickle lot
On the one hand, resistance to move away from the "free banking" model.
On the other hand, unsatisfied when branches close.

Perhaps the "free banking" model, which obviously requires retail banking to be cross-subsidised by other parts of the business (including loan / deposit interest rate spread), is driving a race to the bottom in terms of service, branches etc.

Perhaps and end to the "free banking" model would allow more transparency, betterment of loan / deposit interest spread (in favour of the customer) and even a choice between banks based upon a fee / service balance.  Bank A might be free banking but no customer service, Bank B might be low cost per transaction and telephone service, Bank C might be £x per month and established branch network.

GeoffTF

pecunianonolet said:

However, you may get still charged for faster payments but luckily the EU has stopped this now mandating all EU banks to offer instant transfers for free. 

You may get charged if you want to do more than x number of transfers a month, you get charged if you take out cash from a cash machine not belonging to your bank or it's group. You may get charged for paper statements, get charged if you take up any service in a branch, a fee is charged for deposits of cash, definitely for taking cash from the counter and not the cash machine.

That would still be a free account for most of us. The big UK banks are all making big profits and are paying big disloyalty bonuses to anyone who switches their account to them, unprofitable though it may be. Introducing even those charges does not look likely any time soon.

WillPS

Grumpy_chap said:

We, the public, are a fickle lot
On the one hand, resistance to move away from the "free banking" model.
On the other hand, unsatisfied when branches close.

I'm not sure the last part of this 'public opinion' is as universally held as you imply. Several current account providers have 'gone big on branch' in one way or another - Metro Bank, pre-Sabadell TSB, Virgin Money (pre-CYBG takeover) and most recently Nationwide have all had a go at it. The one thing they all* have in common is the schemes are shortlived and eventually they all follow the same pattern of reduction.

* Nationwide are not there yet but it's notable that even they are keen to state their 'branch promise' will expire after next year.

Grumpy_chap

WillPS said:

I'm not sure the last part of this 'public opinion' is as universally held as you imply. Several current account providers have 'gone big on branch' 

I am not sure that any of those newcomers you mentioned (so not including Nationwide) ever "went BIG on branch".
Metro Bank had one branch in near distance from where I live when, at the time Barclays had five branches.  All but four of the Barclays branches are now closed, but still as many as Metro ever had.

WillPS

Grumpy_chap said:

WillPS said:

I'm not sure the last part of this 'public opinion' is as universally held as you imply. Several current account providers have 'gone big on branch' 

I am not sure that any of those newcomers you mentioned (so not including Nationwide) ever "went BIG on branch".
Metro Bank had one branch in near distance from where I live when, at the time Barclays had five branches.  All but four of the Barclays branches are now closed, but still as many as Metro ever had.

Not sure how you're concluding TSB and Virgin Money were newcomers - the former was carved out of Lloyds TSB, a business some 250+ years old and incorporated the branch network of Cheltenham & Gloucester (150+ years old). The TSB brand itself was not new either. The latter was rebranded from Northern Rock, a business which is 150+ years old. Nationwide is comparitavely young, in fact!

And yes, they absolutely were all going big on branch. In the case of TSB they launched boasting to supplement their already huge inherited hodge-podge branch network with a further 30 branches. The launch campaign was entitled 'Welcome back to Local Banking'!

In the case of Virgin Money they launched a programme of replacing their inherited network of tiny branches with multifloor 'lounges'. In the case of Metro Bank they simultaneously offered unparralleled opening hours but also saturated their target areas with branches, for example opening 2 branches in MK and several in a very small geographic area in Central London.

None of these initiatives have stood the test of time. (Metro is still opening branches but is now opening 'normal hours' and in areas they haven't had a presence.)

Bridlington1

MattMattMattUK said:

Bridlington1 said:

MattMattMattUK said:

subjecttocontract said:

Some of us prefer paper copies don't you know.
We don't all have printers or smart phones !

The point is that if you want that and banking costs were to be transparent you should be charged for that. Probably around £1.50-2.50 per statement 

My only issue with that would be scenarios where you need a statement but the bank is unable to supply pdfs. I'm in the process of buying my first home and have had to get hold of the last 6 months of bank statements from my various accounts, which include my name and address.

For many of the savings accounts I've yet to receive a statement so have had to request that one is generated. Despite getting paperless statements and explicitly requesting a pdf statement be generated, some banks (Santander, Nationwide, First Direct etc) were unable to send custom pdf statements and instead sent paper ones (First Direct insisted on providing both for some reason), despite many others (Monmouthshire, NatWest, Coventry etc) being able to generate custom pdf statements which include your name and address whenever you like. In this scenario it could be considered to be unfair to charge for a paper statement if the bank can not produce a pdf version.

That should be easy to resolve, banks should be required to produce electronic statements, in fact with modern technology there is zero reason for them to not be available on demand (perhaps with a lag of a few working days for pending transactions).

I'd agree in principle, though I would much rather us move to a system where they don't automatically generate statements in the first place (electronic or paper) and instead just allow you to generate a pdf statement online as and when you need it. However I would imagine there is also a cost associated with rolling out such a system in the first place.

My original point though was that if the bank is unable to provide a pdf statement I don't think they should be charging for a paper statement.

MattMattMattUK said:

Bridlington1 said:

MattMattMattUK said:

I have no problem with banks charging, overall it would make more sense, full transparency and every service and transaction chargeable. We are an outlier in European terms in that, where the banks in most countries charge a few cents for various transactions, a bit more postal statements, cash handling etc.

Personally I'm quite happy for us to remain an outlier compared to the rest of Europe. I think the basic things such as sending/receiving faster payments, paying out DDs, using a debit card aught to be free, particularly if we are going to move to a cashless society in which holding a current account in one form or another becomes more essential.

By all means charge for additional items though, such as receiving paper statements where the customer banks online and has the ability to generate a custom pdf statement whenever they wish, ability to receive certain offers such as cashback, exclusive savings products, insurance benefits etc and wasteful/excessive requests such as if someone decided to do a DSAR every week etc. They could also possibly make some cut backs such as making physical debit cards an optional extra etc.

They are not free though, the cost is just hidden, the point is if they were charged for then the cost is transparent and they would not be cross subsidised by lower interest rates on savings, higher rates on borrowing etc. As an example I have friends in Germany, The Netherlands and France, the fees are not huge, but do reflect the real world costs, they said around €10-15 a year in admin fees (per transaction fees), very low fees for debit cards, slightly higher (be few cents) for credit cards, but most non-bank branch ATMs charge, a new bank card costs €10-20, paper statements are around €2, there are fees for going overdrawn and doing it more than three times in a year will mean that the account is closed (overdrafts are rare in Europe). They key point is the fees are clear, up front and everyone knows what they are, rather than hidden in the cost of other services, cross subsidised, free banking for those who pay more in, but fees charged for low earners etc. (although some banks offer an all you can eat model for a monthly fee, and in Germany they will often waive them for a monthly deposit over a certain level, but that level is normally only €700).

I appreciate for the sake of clarity I should've probably said ``provided free of charge to the customer" rather than simply ``free" as that was the intention of the statement you highlight, I accept that pretty much anything will have a cost associated with it, though regardless my viewpoint remains the same. Whilst I can appreciate the need for clear banking fees and can appreciate your argument, I don't have an issue with some cross-subsidising, particularly when it comes to basic services that most people use.

Pretty much everything has costs associated with it, phoning their customer services, speaking to someone over a webchat, online banking/using an app will have costs associated with it, checking suspicious payments etc, the line over what to have a specific charge associated with it has to be drawn somewhere. Do you propose that we pay a fee whenever we need to speak to someone over the phone to cover the costs of the call staff's wages?, or pay a fee to cover the costs of paying someone to investigate a suspicious transaction that the bank has held up for further checks?

At present everyone can access basic banking facilities without an upfront cost to themselves, which will become increasingly important as the use of cash declines. Some things cost the banks money, some things make the banks money and as with any business, the banks generally make a profit overall from the range of services they provide. I've already suggested charging for wasteful requests, add on items etc and suggested some ways the banks could reduce their costs. To me what I've suggested seems a reasonable enough place to draw the line between ensuring you pay for the services you actually use and keeping fees as straightforward as possible. However I appreciate there's probably no right or wrong answer on this one.