Santander free forever bank account changes

GeoffTF

Section62 said:

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.

I decided that the main point was the one that I left. The point is at issue is not whether it is still viable for Santander to offer free business accounts. It is whether it is still viable for them to offer free for life business accounts. Santander has decided that it is not. Offering a free business account as a loss leader to collect customers and introduce a fee a few years later is still viable. It does not cost too much until they have collected the new customers, and they retain a high proportion of them after they introduce the fee. Offering a free for life business account is a different matter altogether.

solidpro

TheBanker said:

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? 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?

For a start, 3 days at my daily rate for the hassle of moving to another bank and for second seeing as they can't complete their contract (giving me free business banking forever), I'd like all the interest (of which I recieved zero) at base rate I would have had on my balances since opening the account in 2008.

solidpro

eskbanker said:

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....

You should try a few echo chambers when you think you're right. It's quite empowering you know.

GingerTim

solidpro said:

eskbanker said:

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....

You should try a few echo chambers when you think you're right. It's quite empowering you know.

And that's exactly why echo chambers aren't terribly useful. I'm sure it is very empowering to have dozens of people telling you that you are right. But what if you're not?

People might think they are right in their position, but how can they be sure of that without being open to critical discussion about where their position is weak(er)?

Section62

GeoffTF said:

Section62 said:

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.

I decided that the main point was the one that I left. The point is at issue is not whether it is still viable for Santander to offer free business accounts. It is whether it is still viable for them to offer free for life business accounts. Santander has decided that it is not.

Again, some forum members are suggesting there is a strong argument that the regulatory burden is such as to preclude the provision of free business banking services.  That we (seem to?) agree that free business banking remains a viable proposition suggests that argument is flawed.

"for life" only matters in relation to any future changes that might happen - it is a hypothetical case (as per one of your posts over the weekend) which FOS and the courts are unlikely to entertain.

The argument "we can't do this because we can't afford to" falls flat.  Likewise the argument "we might not be able to afford to do this in the future".  As FOS apparently told customers in 2015 - come back when the future happens.

Santander choosing to stop 'free for life' accounts because they don't want to is not the same as Santander having to stop the accounts because they cannot afford to do so.  If the clause quoted by TheBanker were relied upon in court then Santander would be expected to demonstrate why the regulatory burden (/change in law) had required them to go back on the promise.

GeoffTF said:

Offering a free business account as a loss leader to collect customers and introduce a fee a few years later is still viable. It does not cost too much until they have collected the new customers, and they retain a high proportion of them after they introduce the fee. Offering a free for life business account is a different matter altogether.

Not really.  The cohort of 'free for life' customers isn't growing.  We don't know the numbers, but it is reasonable to speculate the number is less than it was in 2012, and given the passage of time it may be approaching the point where the numbers show some rapid decline as customers retire.

The sympathy for Santander's position is commendable, but this shouldn't be a bolt out of the blue for them.  The commitment was one they entered into freely.  Within their forward planning they could sensibly account for the 'cost' of providing free banking services to a limited (and reducing) number of customers.  If the senior management deserved the credit TheBanker affords them, then they could have sat down in 2012 and projected the costs forward to the expected death of the last 'for life' customer, and then made budget provision to cover that cost.  Just like they have had to make similar provisions for PPI and car finance, among other costs.

This is a mess Santander got themselves into.  They should own it, and do the decent thing.

neilsedaka

To be pedantic, as far as I am aware the term "free for life" was never mentioned in the Abbey/Alliance & Leicester/Santander promotional material. The term used was "free forever".

eskbanker

GingerTim said:

solidpro said:

eskbanker said:

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....

You should try a few echo chambers when you think you're right. It's quite empowering you know.

And that's exactly why echo chambers aren't terribly useful. I'm sure it is very empowering to have dozens of people telling you that you are right. But what if you're not?

People might think they are right in their position, but how can they be sure of that without being open to critical discussion about where their position is weak(er)?

I'm not even sure that there's much debate about right and wrong as such here - it seems self-evident that Santander are wrong in reneging on a promise and that those objecting to this are right to be aggrieved about that.

To me, it's more nuanced than that, in that it's more about making a clear and compelling case about exactly how or why Santander are wrong (in terms of actionable legal, contractual or regulatory breaches), and which arguments and channels are likely to be most productive and persuasive - part of this is inevitably ascertaining and understanding Santander's position, in order to focus on relevant counter-arguments.

Pointing out that some of the alternative suggested approaches are futile or even counterproductive may come across as negative but should ultimately lead to greater chances of success for those affected....

GingerTim

eskbanker said:

GingerTim said:

solidpro said:

eskbanker said:

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....

You should try a few echo chambers when you think you're right. It's quite empowering you know.

And that's exactly why echo chambers aren't terribly useful. I'm sure it is very empowering to have dozens of people telling you that you are right. But what if you're not?

People might think they are right in their position, but how can they be sure of that without being open to critical discussion about where their position is weak(er)?

I'm not even sure that there's much debate about right and wrong as such here - it seems self-evident that Santander are wrong in reneging on a promise and that those objecting to this are right to be aggrieved about that.

To me, it's more nuanced than that, in that it's more about making a clear and compelling case about exactly how or why Santander are wrong (in terms of actionable legal, contractual or regulatory breaches), and which arguments and channels are likely to be most productive and persuasive - part of this is inevitably ascertaining and understanding Santander's position, in order to focus on relevant counter-arguments.

Pointing out that some of the alternative suggested approaches are futile or even counterproductive may come across as negative but should ultimately lead to greater chances of success for those affected....

Agreed - and I think that's what I was trying to drive at (but you put it much better!)

GeoffTF

neilsedaka said:

To be pedantic, as far as I am aware the term "free for life" was never mentioned in the Abbey/Alliance & Leicester/Santander promotional material. The term used was "free forever".

Yes, indeed. That is important to Santander's position. "Forever" clearly cannot be taken literally. Santander will not be in business for ever, and this planet will not last forever. Santander says that "forever" in this context meant that the accounts were free for as long as they lasted, and that they were closed in 2015.

clairec666

GeoffTF said:

neilsedaka said:

To be pedantic, as far as I am aware the term "free for life" was never mentioned in the Abbey/Alliance & Leicester/Santander promotional material. The term used was "free forever".

Yes, indeed. That is important to Santander's position. "Forever" clearly cannot be taken literally. Santander will not be in business for ever, and this planet will not last forever. Santander says that "forever" in this context meant that the accounts were free for as long as they lasted, and that they were closed in 2015.

Presumably it is nailed down somewhere in the T&Cs with no ambiguity, and whether "forever" ends when the original account holder dies, etc.