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Wednesday, November 15, 2006

The End of Free Banking

Those of you who already feel that UK banks are making more than enough money, may be a tad "annoyed" to learn that there are plans to make even more money; by charging customers for the privilege of placing their money in a bank account.

The rot has started with First Direct, part of HSBC, which plans to charge £10 per month to customers who run current accounts. Only those who deposit £1,500 a month or who maintain an average balance of £1,500 will escape the fee.

In other words, a large number of their customers will have to pay £120 per year for the "privilege" of holding a First Direct account.

Needless to say, where one bank goes, others will follow.

Alan Duncan, Shadow Trade and Industry Secretary, said:

"This is an irrational basis for charging. This is simply a tax on the lower-paid which will prevent access to bank accounts. I cannot see any way in which this is fair or justified."

The Office of Fair Trading (OFT) recently said that it would investigate current account charges, prompting some to predict an end to free banking as a "tit for tat" move by the banks.

Banks already do rather well for themselves via charging for unauthorised overdrafts and other transactions, such as foreign currency transmission. Indeed they make around £5BN a year from unauthorised overdraft charges. The OFT investigation on capping these fees is clearly the trigger for banks to look for other ways of charging their customers.

Meanwhile, the long suffering customer gets screwed by the banks whatever happens.

Pathetic isn't it?

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