Santander free forever bank account changes

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.

solidpro

Devil's Advocate responses on here really get me down.

IanManc

eskbanker said:

  The suspicion remains that their legal advice will be more robust this time round but time will tell....

I don't think they've had legal advice before doing what they've done. I think that the decision has been made because the last person left who was in the business last time they tried it on has moved on or retired.

In the commercial world these decisions are usually made by arrogant corporate directors who think they walk on water without any reference to lawyers for a view on the legal ramifications, and the lawyers are only subsequently consulted by the perpetrators when they want help getting themselves out of the mess they've created.

Zanderman

IanManc said:

eskbanker said:

  The suspicion remains that their legal advice will be more robust this time round but time will tell....

I don't think they've had legal advice before doing what they've done. I think that the decision has been made because the last person left who was in the business last time they tried it on has moved on or retired.

In the commercial world these decisions are usually made by arrogant corporate directors who think they walk on water without any reference to lawyers for a view on the legal ramifications, and the lawyers are only subsequently consulted by the perpetrators when they want help getting themselves out of the mess they've created.

Corporate memories can certainly be poor but there will be Santander personnel who understand what is being proposed echoes the previous attempt and subsequent climb-down. 

This proposal (abandoning a whole account type) is not the sort of thing that one or two directors would make and simply issue a directive. It will, I would suggest, have been consulted on internally and the implications researched. The likely backlash will, in that case, have been flagged up and discussed long before the decision to go ahead was made.

IanManc

Zanderman said:

IanManc said:

eskbanker said:

  The suspicion remains that their legal advice will be more robust this time round but time will tell....

I don't think they've had legal advice before doing what they've done. I think that the decision has been made because the last person left who was in the business last time they tried it on has moved on or retired.

In the commercial world these decisions are usually made by arrogant corporate directors who think they walk on water without any reference to lawyers for a view on the legal ramifications, and the lawyers are only subsequently consulted by the perpetrators when they want help getting themselves out of the mess they've created.

Corporate memories can certainly be poor but there will be Santander personnel who understand what is being proposed echoes the previous attempt and subsequent climb-down. 

This proposal (abandoning a whole account type) is not the sort of thing that one or two directors would make and simply issue a directive. It will, I would suggest, have been consulted on internally and the implications researched. The likely backlash will, in that case, have been flagged up and discussed long before the decision to go ahead was made.

I disagree. I think it is exactly the sort of disaster that one or two supremely arrogant directors would think up and implement. I don't think it has been researched and discussed, and I think the backlash is completely unanticipated by Santander.

gt94sss2

GeoffTF said:

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?

Santander purchased Abbey National and therefore legally  took responsibility for all their liabilities/contracts.

imho it is irrelevant how good their due diligence was or not in 2003/4.

gt94sss2

solidpro said:

But in my complaint I state that Santander says the reason they feel they can impose fees is because the banking landscape has changed. I would argue the landscape has not changed in relation to this product because of the fact free business banking is still readily available, they /would/ care about what other banks offer or not ?

Point taken about treating customer's unfairly.

Playing devil's advocate (sorry!), if I wanted to I could argue that landscape has changed in the past 20 years with things like:

- increased regulations
- introduction of ring fencing for UK retail banks

Yes, some costs will have gone down as well but the economics and business strategies of other banks will be different.

It won't be for the FOS to confirm whether the product is still viable or not for Santander to offer in determinating the outcome