Santander free forever bank account changes

Section62

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.
  

...
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.
....

I don't think it is convincing at all.

It is like arguing it is "unfair" that some Santander personal customers have free 'Everyday' banking, whereas others have to pay for 'Edge'.  Or if they are going to point out 'Edge' comes with benefits that 'Everyday' doesn't, then it is like complaining it is unfair '123' (full fat) account holders get better benefits than 'Edge' customers do.

Making an argument that one group of customer's benefits are unfair to other customer group isn't something I'd imagine Santander will waste their time on.

Section62

TheBanker said:

GeoffTF said:

gt94sss2 said:

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.

Yes, Abbey National was a going concern when it was taken over. If it was bankrupt, the situation would be different. My point was that tacpot12 needs to justify his statements with evidence.

There is the issue of what the original marketing material said. In particular, was there "terms apply" at the bottom of the page in tiny print. In the absence of a "terms apply", did the terms and conditions still take precedence over the marketing? It is also important, of course, what the original terms and conditions said.

There is also the issue of what happened when the customers were moved to a new account. Did they accept a change in the terms and conditions by continuing to use the account, for example?

Even if Santander is in breach of contract, there is still the question of what the level of compensation should be for having to switch the account to another bank.

This is a key question - assuming the FOS route is sucessful, what outcome are people looking for. I know the immediate answer will be to reinstate free banking forever, but if FOS decide they can't direct Santander to do that, their only option is to aware compensation. So how much compensation are people going to be seeking, and for what?

There was a lengthy discussion about this near the start of the thread where folk were previously trying to argue these customers don't have grounds for complaint.  Perhaps it might be more constructive if you go back and read the earlier discussion?

TheBanker said:

Bearing in mind that the customers can avoid any costs by switching to another bank, and that there is a switching service to make this as easy as possible?

Perhaps for a personal customer, but the CASS service doesn't do everything that some businesses might need to do.  For example, updating websites/accounting systems, reprinting stationery etc.  Nor the time (=money, when you are in business) taken to research alternative banking providers, applying for new account(s), providing ID etc etc.

The idea that business customers can switch accounts with zero cost might suggest a possible lack of understanding of what running a business entails?

Section62

TheBanker said:

gt94sss2 said:

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

I'm surprised Santander haven't used this argument, and I imagine they will when the complaints are assessed by FOS or by a court. I believe the original advertising said something like: We guarantee that unless there are any changes to the law or banking regulations, or any new taxes relating to bank charges, you will benefit from free day-to-day business banking forever...

There have been many, many changes to banking regulation since this offer was made, and I think there's a strung argument that in aggregate these changes justify Santander's commercial decision to make changes to their proposition. 

Again, this was discussed at length earlier in the thread.

I doubt a court would come to any conclusion other than "changes to the law or banking regulations"  would be ones directly related to charges made for providing accounts/services, rather than any changes in law or banking regulations.

I'd give Santander more credit than asking their lawyers to make this argument in court.... the claimants only need to point to other providers offering free business banking, and HSBC now making theirs free (having previously charged), to make the "strung argument" look nonsensical.  Why, if Santander needs to charge business customers because of regulatiory change, are they still able to offer free personal banking?

eskbanker

solidpro said:

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

I can't say I've seen the Facebook group mentioned previously, but imagine that to be more like an echo chamber, if that's what you're wanting to read?  Threads on a site like this will tend to be more rounded, with multiple points of view being expressed, which to me seems more valid and useful than repeated posts driven more by 'lynch mob' emotion than considered analysis of the legal or contractual situation....

neilsedaka

This is the Facebook group. It is excellent, especially the posts by Lance French.

https://www.facebook.com/groups/434991753218662

Click the Files menu at the top for lots of good evidence and advice for when it is time to contact the FOS.

Facebook groups are really good with no adverts. Completely different to the default Facebook fare. Well run by voluntary admins and excellent discussions. To ignore is to miss out!

janusd

neilsedaka said:

This is the Facebook group. It is excellent, especially the posts by Lance French.

including the one when he threatened a Santander employee that he'd call the police if Santander took any fees ? 

Just had my complaint call back. Nice lady, just doing her job. Basically scripted. I also informed her taking money without my consent will be theft and I will call the police when they do.

pathetic. just pathetic.

reading that last month got me more angry than Santander imposing fees on the account - I wasn't inclined to complain to Santander / FOS about this before reading some of the stuff he posted - I certainly wasn't going to afterwards. I long assumed FOS wouldn't rule before the charges were imposed, and i've got better things to do than fight for something that ultimately isn't really that important to me any more.

I now have new business accounts, opened and funded, with Mettle (took 5 days for approval) and Virgin Money (literally took 10 minutes to get approved) - have debit cards for both (haven't had one with Santander for years), monthly cashback on card purchases with Virgin, plus a business savings account with them too. Mettle don't support switching yet, so in 4 weeks time, i'll be switching the Santander account to Virgin - though I suspect Mettle will be my primary account.

for the record, I have no intention of closing any personal accounts with Santander - absolutely none.

I can now also unsubscribe from this thread because i've moved on from this topic - good luck to those who are fighting them for the right reasons, and doing it in the right way.

TheBanker

IanManc said:

TheBanker said:

gt94sss2 said:

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

I'm surprised Santander haven't used this argument, and I imagine they will when the complaints are assessed by FOS or by a court. I believe the original advertising said something like: We guarantee that unless there are any changes to the law or banking regulations, or any new taxes relating to bank charges, you will benefit from free day-to-day business banking forever...

There have been many, many changes to banking regulation since this offer was made, and I think there's a strung argument that in aggregate these changes justify Santander's commercial decision to make changes to their proposition. 

Clearly Santander don't think it's a strong argument or they'd have used it.

And they must have thought of it,  bearing in mind the "extensive work to understand the legal and regulatory position" and "many safeguards" before the decision was made that you have claimed, with your vastly superior knowledge.

The argument they have used is 'the landscape has changed'. It would be easy to expand on this as part of a FOS submission or court defence to say 'the landscape has changed as a result of significant changes to regulation over the last 10+ years (as per the original caveat) and therefore it is no longer viable to offer free banking'. It may be an argument they're keeping in reserve for their first FOS or court case.

Section62

TheBanker said:

IanManc said:

TheBanker said:

gt94sss2 said:

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

I'm surprised Santander haven't used this argument, and I imagine they will when the complaints are assessed by FOS or by a court. I believe the original advertising said something like: We guarantee that unless there are any changes to the law or banking regulations, or any new taxes relating to bank charges, you will benefit from free day-to-day business banking forever...

There have been many, many changes to banking regulation since this offer was made, and I think there's a strung argument that in aggregate these changes justify Santander's commercial decision to make changes to their proposition. 

Clearly Santander don't think it's a strong argument or they'd have used it.

And they must have thought of it,  bearing in mind the "extensive work to understand the legal and regulatory position" and "many safeguards" before the decision was made that you have claimed, with your vastly superior knowledge.

The argument they have used is 'the landscape has changed'. It would be easy to expand on this as part of a FOS submission or court defence to say 'the landscape has changed as a result of significant changes to regulation over the last 10+ years (as per the original caveat) and therefore it is no longer viable to offer free banking'. It may be an argument they're keeping in reserve for their first FOS or court case.

Except:

1) Other banks offer free business banking.

2) HSBC used to charge for business banking, but right now are making it free.

3) Santander (and other banks) - under the same regulatory framework - are capable of providing (orders of magnitude more) free personal current accounts, apparently without facing bankruptcy.

So if this really was what they have in reserve (and I'd be amazed if their legal advisers green-light it) then it stands next to 'the dog ate my homework' in the scale of blame-shifting excuses.

On the other hand, Santander have been expressing frustrations about over regulation in the UK. So in that context, 'the landscape has changed as a result of significant changes to regulation over the last 10+ years' could be seen as fitting into a pattern of comments aimed at having regulations cut back.  Perhaps we'll find out if Santander threaten to quit the UK market if FOS uphold these customer's complaints?

GeoffTF

Section62 said:

1) Other banks offer free business banking.

None of the other banks are offering "free for life" business accounts.

Section62

GeoffTF said:

Section62 said:

1) Other banks offer free business banking.

None of the other banks are offering "free for life" business accounts.

Actually I think the point you've edited out of your post (something like 'are they doing it profitably or is it a loss leader') was probably the stronger point.  For that you'd need to ask the banks, but the collective wisdom here seems to be that there is little to no profit to be made from providing current accounts - the profit comes from selling other services to current account customers (or maybe is about increasing market share to boost company value).

On the remaining point, it doesn't seem relevant to the issue under discussion.  Santander are also not offering "free for life" business accounts currently.  We're talking about promises made in the past.

This 'regulatory burden' argument being put forward by some forum members would apply irrespective of the "for life" component.  If it costs too much to provide free business accounts now, then how can the other banks do it?  If it might cost too much in the future, then come back and make the case for introducing charges when that time comes.  None of us know what will happen in the future - if the government roll back regulation (e.g. ringfencing) then the future costs of providing free banking could reduce.  Justifying the imposition of charges today - in case regulatory costs increase in the future - isn't a persuasive argument.  So in the here and now, the "for life" bit doesn't matter.