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EnergyWhy cash machines are under threat
Filed under: Current Accounts
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Gareth Fuller/PA
It is feared that if other banks follow the lead by Lloyds and RBS in limiting some customers to only using own their bank's cashpoints, one in three machines could be at risk of closure in certain regions.
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The Lloyds Banking Group (Lloyds TSB and Bank of Scotland) and RBS (Royal Bank of Scotland and Natwest) have made the decision to bar customers with basic bank accounts from using machines run by anyone but their own bank.
Basic bank account customers tend to be those on a limited budget as the accounts do not have an overdraft to encourage stricter money management. However, it is these customers who use cash more readily in order to budget and keep track of their money.
Your guide to banking
Your guide to current accounts
Now cash machines that have seen a drop in transactions as a result of the Lloyds and RBS move are at risk of closure. The affected regions are mainly rural or deprived urban areas, which have already been hit by many bank branch closures.
Restricted access
The restrictions undo five years of advancements in the cash machine network, which has seen the number of free-to-use machines increase from 36,900 in 2007 to 43,900 in 2011. Free machines now account for 97% of all cash withdrawals.
In July the Citizen's Advice (CAB) published the results of a study into free cash machine access. It found that while on the whole experience was positive with just 6% of people reporting trouble accessing their funds for free at an ATM, this figure was three times higher for those that held a basic bank account with a bank that restricted access to the LINK network.
The CAB said: "There is a very real danger that other banks will follow this decision [by RBS Group and Lloyds] and remove the possibility for their basic bank account customers to access the link network.
"We sincerely hope that they will not choose this route and would also call on those banks which have brought in this restriction to reverse their decision as soon as possible."
According to the Daily Mail, RBS says that restricting access will save £10 per account each year in fees, which translates to just over £10 million a year. Lloyds estimates it saves £12 per account each year.
Impact on customers
If ATM closures take place, vulnerable customers of these banks will be faced with limited options. Alternative methods of accessing cash such as through a Post Office counter or via cashback are not acceptable solutions as using cashback requires purchase which can be an extra unnecessary expense, and Post Offices are not always accessible.
So these customers will either have to travel further to access their money or change their account. However, being able to upgrade from a basic account with their existing provider or taking their custom elsewhere will largely depend on whether banks and building societies will allow it.
The CAB highlights that for the banks and building societies that do offer basic bank account holders more flexibility and convenience, the fear is that they will be bombarded with more of these less profitable accounts than their competitors.
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- 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>
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- 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>
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- 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>
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Janet Piper
