I said this would happen

Financial experts have given warning that the era of “free banking” is coming to an end as banks seek to make money for providing even basic services.

A combination of an expected limit on overdraft charges, falling profits and the recession is forcing banks to turn away from traditional free accounts.

Way back when Gordon Brown decided that it was terribly awful that dormant and orphan accounts simply sat there on the bank\’s books. They were able to lend the money out but they probably weren\’t paying any interest on it and so, well, the money in them should thus go to the State: or to selected charities.

I said that, at the time, that we did in fact have a competitive market for bank accounts. So the money that was undoubtedly being made from the addition to the bank\’s floats (roughyl speaking, the money they\’re not paying interest on but which they can charge interest of lending out) was probably subsidising some part of the bank\’s activities: like, say, free current accounts, something that doesn\’t happen all that much elsewhere.

The float has been reuced, free accounts are disappearing.

No, of course it\’s not the only factor, but it is one of them.

2 comments on “I said this would happen

  1. If the banks are to charge us for our current accounts do we have the right to ask the banks for a decent return on our investment accounts for which, at present, we receive very very little ?

  2. The other obvious factor is the perfectly legal and agreed penalty charges on unauthorised overdrafts etc, which were struck down by the courts when one of the agreeing parties decided to whinge about it rather than abide by the conditions they had knowingly signed up to.

    Less income from that source means fewer benefits for the customers.

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