Santander free forever bank account changes

Section62

eskbanker said:

tacpot12 said:

Santander's decision is a major money-making opportunity for the FOS!

FOS is a not-for-profit organisation - if revenues exceed costs they adjust case fees or levies accordingly.

So Santander could be generously helping to reduce the fees paid by other financial service providers?

eskbanker

Section62 said:

eskbanker said:

tacpot12 said:

Santander's decision is a major money-making opportunity for the FOS!

FOS is a not-for-profit organisation - if revenues exceed costs they adjust case fees or levies accordingly.

So Santander could be generously helping to reduce the fees paid by other financial service providers?

Indeed, although it strikes me that FOS may effectively consolidate complaints if they receive significant volumes relating to exactly the same issue, as there's little to be gained by devoting multiple resources to identical tasks, so wonder if the bill will actually be £650 per complainant after all?

GeoffTF

tacpot12 said:

I've made the point in my complaint to the FOS that Santander had full knowledge of the promises that Abbey had made to its customers and it had agreed to be bound by those obligations when they bought the Abbey Business Banking business.

Do you have documentary evidence for that?

tacpot12 said:

I also make the point that Santander are trying to get out of these obligations by the convoluted method of discontinuing the free account and offering to move me to a different account type.

Can you prove that Santander broke the law or contravened other regulations by doing that?

What compensation are you claiming?

TheBanker

tacpot12 said:

I've opened my complaint with FOS, and wanted to make some comments on how the thread has moved on since I last posted on it. 

There is good mileage for politicians to call on Santander change their mind. Supporting small businesses is a service to the economy. Santander themselves recognised this in their Social Responsibility reports in the early 2010s. 

flickadee001 commented that they had never had an issue before now. I too have had no reason to contact Santander ever, except to complain, and mentioned this in my complaint to the FOS. 

Santander's decision is a major money-making opportunity for the FOS! The FOS might make representations to the FCA and government that might bring more pressure to bear.

I'd agree that closing accounts now is premature. 

It's difficult to see how Santander decided that was a good idea. The numbers of accounts involved, the fact that the accounts don't cost them any to service, the money that customers have on deposit and the risk to their reputation and future recommendations from customers make this seem a bonkers decision made by someone who doesn't have the first idea about Banking.

I've made the point in my complaint to the FOS that Santander had full knowledge of the promises that Abbey had made to its customers and it had agreed to be bound by those obligations when they bought the Abbey Business Banking business.

I also make the point that Santander are trying to get out of these obligations by the convoluted method of discontinuing the free account and offering to move me to a different account type.

I've no idea whether my complaint will be successful, but I will be moving my accounts and credit balance to another free banking service if Santander do start to charge me. 

Bit in bold:

• Only Santander know the number of accounts involved - there have been some speculative numbers in the press and posted here, but nobody apart from Santander can confirm these. And only Santander know how much money these customers collectively have on deposit.
• Additionally, only Santander know the cost to service these accounts, but it won't be zero. Every post office transaction, Faster Payment and ATM/Card payment comes at a cost. Then there are costs such as sending emails/text messages, regulatory compliance costs e.g. checking/updating KYC information, the costs of refunding any customers who are victims of fraud and making good any errors, the cost of creating and issuing new cards and PINs and so on. The cost of some of these items may be negligible in the context of an individual account but not in aggregate.
• Also, Santander incur fixed costs providing Business Banking accounts. They need to invest in and maintain IT systems, they have compliance costs, they need to staff a contact centre, and so on. Whilst these costs are not necessarily going to increase every time a new account is opened, the Business Banking accounts in aggregate need to generate enough revenue to cover all of these costs. There is a convincing argument that allowing some customers to bank for free is unfair as it means those paying the £9.99 fee are effectively subsidising those who aren't.
• I think Santander will have been aware of the potential backlash, the potential account closures and the potential closure of other related accounts, but decided to go ahead anyway. It is naive to think that someone just decided to make this change without any understanding of the potential impacts.

TheBanker

I can't really see the Government (as opposed to individual politicians) getting involved in this. The business banking market is competitive (arguably more so now than when Abbey/Sananter made this promise), Santander does not have a monopoly and the industry even provides a free account switching service to help customers move their accounts. 

And the Government's current stance seems to be that there is too much regulatory interference which is hampering growth (look at how HMT appeared to be siding with the lenders in the motor finance commission claims). So to then direct a firm that they cannot charge, when their competitors do, would be very odd indeed. I think their view will be that if there has been a breach of contract, that's a matter for either FOS or the courts to resolve but the immediate remedy for the small business is to move their account elsewhere. 

amyfairweather

Someone on the Facebook group has suggested making a subject access request for all information that Santander hold under GDPR.  I will be doing so this week and they are obliged to respond within 28 days.

(Although the link they provided was for consumer finance rather than business banking).

Note: you would need to ask in a personal capacity, companies and partnerships do not have GDPR rights.

eskbanker

TheBanker said:

• Additionally, only Santander know the cost to service these accounts, but it won't be zero. Every post office transaction, Faster Payment and ATM/Card payment comes at a cost. Then there are costs such as sending emails/text messages, regulatory compliance costs e.g. checking/updating KYC information, the costs of refunding any customers who are victims of fraud and making good any errors, the cost of creating and issuing new cards and PINs and so on. The cost of some of these items may be negligible in the context of an individual account but not in aggregate.
• Also, Santander incur fixed costs providing Business Banking accounts. They need to invest in and maintain IT systems, they have compliance costs, they need to staff a contact centre, and so on. Whilst these costs are not necessarily going to increase every time a new account is opened, the Business Banking accounts in aggregate need to generate enough revenue to cover all of these costs. There is a convincing argument that allowing some customers to bank for free is unfair as it means those paying the £9.99 fee are effectively subsidising those who aren't.
  

It's obviously never been free to provide business accounts, and would clearly have cost money at the time the promise was made, although it is true that there has been quite a bit of regulatory change since the promise was first made, some of which will have increased those costs.

Personally I don't find the last sentence as convincing as you suggest - there are many examples of differential product terms applying across customers of the same bank, e.g. savings interest rates introduced at different times, overdraft limits and rates, credit card limits, 0% credit offer durations, etc, which inherently have that cross-subsidising effect, so in itself that's not necessarily unfair.

TheBanker said:

• I think Santander will have been aware of the potential backlash, the potential account closures and the potential closure of other related accounts, but decided to go ahead anyway. It is naive to think that someone just decided to make this change without any understanding of the potential impacts.

Yes, they clearly won't have expected affected businesses to be overjoyed about this so will have anticipated the backlash, but the flip side to that argument is that they also will have expected a backlash last time they tried this but still ended up backing down.  The suspicion remains that their legal advice will be more robust this time round but time will tell....

eskbanker

amyfairweather said:

Someone on the Facebook group has suggested making a subject access request for all information that Santander hold under GDPR.  I will be doing so this week and they are obliged to respond within 28 days.

(Although the link they provided was for consumer finance rather than business banking).

Note: you would need to ask in a personal capacity, companies and partnerships do not have GDPR rights.

Is this solely to create extra work for Santander or does anyone believe that there'll be anything useful discovered via that process?

And to be pedantic, SAR responses need to be issued within a month, rather than 28 days:

https://www.legislation.gov.uk/ukpga/2018/12/section/54

TheBanker

eskbanker said:

TheBanker said:

• Additionally, only Santander know the cost to service these accounts, but it won't be zero. Every post office transaction, Faster Payment and ATM/Card payment comes at a cost. Then there are costs such as sending emails/text messages, regulatory compliance costs e.g. checking/updating KYC information, the costs of refunding any customers who are victims of fraud and making good any errors, the cost of creating and issuing new cards and PINs and so on. The cost of some of these items may be negligible in the context of an individual account but not in aggregate.
• Also, Santander incur fixed costs providing Business Banking accounts. They need to invest in and maintain IT systems, they have compliance costs, they need to staff a contact centre, and so on. Whilst these costs are not necessarily going to increase every time a new account is opened, the Business Banking accounts in aggregate need to generate enough revenue to cover all of these costs. There is a convincing argument that allowing some customers to bank for free is unfair as it means those paying the £9.99 fee are effectively subsidising those who aren't.
  

It's obviously never been free to provide business accounts, and would clearly have cost money at the time the promise was made, although it is true that there has been quite a bit of regulatory change since the promise was first made, some of which will have increased those costs.

I agree, but I was directly addressing a post which said: It's difficult to see how Santander decided that was a good idea. The numbers of accounts involved, the fact that the accounts don't cost them any to service,..

The accounts clearly do cost them to service and you are correct to point out that they always have. There are factors, for example increasingly demanding anti-money laundering rules, that will have increased these costs. There are also changes such as a general shift from cash/cheques/paper statements etc to digital banking that should have reduced costs. The net effect of these changes is unknown to anyone but Santander. The fact remains though any argument that 'the accounts don't cost them any to service' is not valid.

It's possible the poster made a typo and meant to say 'don't cost them any more to service [than they did in the past]'. But I read it as 'don't cost them anything to service'.

TheBanker

amyfairweather said:

Someone on the Facebook group has suggested making a subject access request for all information that Santander hold under GDPR.  I will be doing so this week and they are obliged to respond within 28 days.

(Although the link they provided was for consumer finance rather than business banking).

Note: you would need to ask in a personal capacity, companies and partnerships do not have GDPR rights.

It is hard to see what benefit you'll get from this. You will receive information that they hold about you as an individual which will be things like your contact details and KYC information. As you say yourself information about the company or partnership's bank account would not be included. Even if it was you'd get things like listings of transactions. I doubt you will receive anything that relates to the commercial decision to end free banking or that would be supportive of a FOS complaint.