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.