Credit Cards
Savings
Life Insurance
Car Insurance
Mortgages
Travel Insurance
Loans
Home Insurance
EnergyBarclays to charge for current accounts?
Filed under: Current Accounts
Share
Text Size
A
A
A
Charging for current accounts is a good idea "in principle", according to Sir David Walker, the new boss of Barclays Bank.Just days after taking over as Chairman of the beleaguered bank, he claimed that mis-selling scandals were a "consequence" of free banking - sparking fears of account fees for all.
Your guide to banking
Your guide to current accounts
MPs and consumer groups reacted angrily to Walker's comments, accusing him of making a "major blunder" and further damaging the bank's already tattered reputation.
Former Barclays chairman, Marcus Agius, left in disgrace along with former chief executive Bob Diamond after the bank was fined for trying to manipulate inter-bank lending rates.
Your guide to banking
Your guide to current accounts
Labour's Treasury spokesman, Chris Leslie, told the Daily Mail newspaper: "This is a major blunder for the new chairman who should be focused on rebuilding trust and confidence, not talking about how to charge their most loyal and long-standing customers."
However, Walker, who has previously held top jobs at Morgan Stanley, Lloyds TSB and the Bank of England, is not the first bank boss to imply that free banking could soon be consigned to history.
Last month, the chairman of the Financial Services Authority, Lord Turner, said free accounts should become a thing of the past.
Meanwhile, consumer group Which? argues that the idea of free banking is already a "complete myth".
"Even now, consumers pay more than £9 billion a year in fees and lost interest on their current accounts," it said.
It is true that some High Street banks already charge up to £25 a month for current accounts, while customers who miss payments or exceed their limits also stung with penalty charges on overdrafts, credit cards and loans.
But switching to a charging structure could see consumers charged up to £15 a month for a fixed number of cash machine withdrawals, direct debits, standing orders and cheques – even if they stay in credit.
What's more, any transactions beyond these caps would attract extra charges, making banking even more expensive for many.
Walker, who was appointed Barclays chairman on Thursday, claims that introducing charges of this kind will prevent mis-selling scandals such as the one surrounding Payment Protection Insurance, which was automatically added to millions of loans taken out over the last 10 years.
"Because banks are not charging, it drives them inexorably into this sort of position," he said.
Which? branded this suggestion "completely ridiculous". If current account charges result in better service, however, some people believe we might be better off as a result.
Mike O'Connor of Consumer Focus said: "If in return for fair fees we get banks competing for our custom by providing excellent service, it may be a price worth paying."
10 things we hate about our banks
- 1. PPI<p> More than 46,000 of 106,000 the complaints received by the FOS in the second half of last year related to payment protection insurance (PPI). And the organisation is expecting to receive a record 165,000 PPI complaints in 2012/2013.</p> <p> The huge numbers are due to the PPI mis-selling scandal that should now be a thing of the past, but there is no doubt that the insurance, which can add thousands to the cost of a loan, is highly unpopular!</p> <div> </div> <div> (Pictured: Martin Lewis after the PPI payout ruling)</div>
- 2. Mortgages<p> Complaints about mortgages jumped by 38% in the last six months of last year, the FOS figures show, compared to an increase of just 5% in investment-related complaints.</p> <p> Common gripes about mortgages include the exit penalties imposed should you want to sell up or change you mortgage before a fixed or discounted deal comes to an end, and the high arrangement fees charged by many lenders.</p> <div> </div>
- 3. Savings rates<p> While there is nothing in the data released by the FOS about the number of complaints relating to savings accounts, hard-pressed savers have been struggling with low interest rates for several years now.</p> <p> You can get up to 3.10% with Santander's easy-access eSaver account, but many older accounts are paying 1.00% or less and even this market-leading offer includes a 12-month bonus of 2.60% - meaning that the rate will plummet to just 0.50% after the first year.</p>
- 4. Borrowing rates<p> Banks are imposing the highest authorised overdraft interest rates since records began, with today's borrowers paying an average of 19.47%, according to the Bank of England.</p> <p> A typical Briton with an overdraft of £1,000 is therefore forking out around £200 in interest charges alone. Coupled with meagre returns on savings, it's enough to make your blood boil!</p>
- 5. Penalty charges<p style="text-align: left;"> While authorised overdrafts may seem expensive, going into the red without permission will cost you even more due to huge penalty fees.</p> <p style="text-align: left;"> Barclays, for example, charges £8 (up to a maximum of £40 a day) each time that there is not enough money in your account to cover a payment.</p>
- 6. International transfer charges<p> If you need to send money abroad, the likelihood is that your bank will impose transfer charges - and offer you a poor rate of exchange. Someone transferring a five-figure sum could easily lose out by £500 or more as a result.</p> <p> The good news, however, is that you can often get a better deal by using a currency specialist such as Moneycorp.</p>
- 7. Waiting on the phone<p> <span style="text-align: left; ">Automated telephone banking systems, not to mention call centres in far-flung parts of the world, are one of our top gripes - especially as we often encounter them when we are already calling to report a problem.</span></p> <p> In the words of one disgruntled customer: "What is it about telephone banking that turns me into Victor Meldrew? Well, maybe it's the fourteen security questions, maybe it's the range of products that they try to push or maybe it's because I'm forced to listen to jazz funk at full volume while my phone bill soars.</p> <div> </div> <div> "Actually though, I think it's because the people I eventually speak to rarely seem able to solve the issue I'm calling about."</div>
- 8. Being treated like a number<p> The days of a personal relationship with your bank manager are long gone - for the huge majority of us at least.</p> <p> When ethical Triodos Bank investigated recently why around 9 million Britons would not recommend their banks to a friend or relative, it found that almost a third felt they were not treated as individuals. Another 40%, meanwhile, were simply disappointed with the customer service they received.</p> <div> </div>
- 9. Long queues in branches<p> <span style="text-align: left; ">When you're in a rush, the last thing you want to do is wait in a long queue at your local branch.</span></p> <p> Researchers at consumer champion Which? recently found that most people get seen within 12 minutes, but you could have a much longer wait if you go in at a busy time. Frustrating stuff!</p> <div> </div>
- 10. Bankers' bonuses<p> The Triodos Bank research also indicated that the bonus culture that ensured the bank's high-flying employees received large salaries, even when it was making a loss at the taxpayer's expense, was hugely unpopular with consumers.</p> <p> About a quarter of those who would not recommend their current banks said this was the main reason why. And with RBS executives sharing a £785 million bonus pool despite the bank, which is 82% publicly owned, making a loss of £2 billion last year, it's not hard to see why.</p>
More stories
