Debate rages over call to end free banking
CONSUMER groups and politicians yesterday joined the debate on bank fees following claims by a top Bank of England official that free current accounts are a “dangerous myth”.
Andrew Bailey, the Bank’s executive director and chief executive-elect of the new banking regulator the Prudential Regulatory Authority, said the lack of clarity on current account fees “may have encouraged the mis-selling” of products such as payment protection insurance and that consumers would find it easier to compare products if monthly fees were introduced.
“The reform of retail banking in this country cannot move ahead unless we tackle the issue of free in-credit banking, and have a much better sense of what we are paying for and how we are paying,” he added.
Andrew Tyrie MP, chairman of the Treasury Select Committee, told City A.M. that “we cannot carry on as we are” and regulators must “enable the banks to deal with this” on a collective basis.
“It cannot be right that millions of account holders have no idea how much their bank is really charging them, therefore we will be pressing the regulators to make sure they turn words into action,” he said.
Richard Lloyd of consumer group Which said consumers already pay “over £9bn a year” in fees and lost interest on current accounts but “the idea that if banks charged more, they would stop trying to mis-sell other financial products is completely unfounded”.
Chris Leslie, Labour’s shadow financial secretary to the Treasury, said the reforms could punish ordinary savers: “Hard working people will be extremely concerned at the prospect of having to pay around £15 per month for basic deposit, cheque and transactional services.”