CHARGING for bank accounts will promote innovation in the sector, RBS’s Moray McDonald told MPs yesterday.
Most current accounts are free when they have positive balances, which critics argue makes it hard for new banks to enter the sector and squashes competition.
“Would we be in a better place if we didn't have free-if-in-credit banking?” the managing director of products, personal and business banking asked.
“Yes we would. There would be more incentive to innovate because you would gain from doing so and be able to differentiate more, that makes a lot of sense to me.”
The idea is consistently unpopular with consumers, with opinion polls showing most Britons do not want to pay regular fees.
However, MPs on the Treasury Committee also lean in favour of transparent charges, rather than the current system where banks make money from a combination of low interest rates, overdraft fees and other opaque charges.