Barclays' chief's view on bank account charges
UK200Group members: bank account charges not a step forward
Members of the UK200Group of independent chartered accountancy and lawyer firms have responded to comments by Barclays chief Antony Jenkins on charging for bank accounts.
Asked whether he would approve of free in-credit bank accounts being outlawed and charges introduced across the board, he said: ‘I do think that would be a step forward, yes”.
However, he said it was unlikely that any bank would make the first move in case it lost business and that the change would "probably have to be regulated or legislated”.
Jonathan Russell, partner, UK200Group member firm ReesRussell
“The banks would love to see the end of free banking but all are too frightened by commercial reality to be the first to do so. All banks, however, are introducing charges for more and more of their accounts on the pretence of offering something additional whereas generally it is emphasising something that was previously there and removing it from the basic account.
“Because banks have increased their margins, they should actually now be making more money out of credit balances than they did before when rates were higher. Most people are prepared to pay for service and if the banks can convince customers they are getting some service they will pay an appropriate amount but the majority of customers consider banks and service an oxymoron.
“There is no need for legislation; no matter how much the banks would like someone else to blame for the end of free banking, commercial pressures will in the end dictate.”
Daniel Shear, senior corporate finance partner at UK200Group member firm BKL
“I suspect that in earning £5.5 million last year, the boss of Barclays can just about afford to pay for a bank account (if he wouldn’t get free banking as a perk anyway). The same might not be true of everyone in the country.
“We already effectively pay for bank accounts as current accounts rarely pay in-credit interest so the banks are using our money for free to make loans and earn interest. I doubt whether the banks would start paying in-credit interest again even if they started charging for all current accounts.
“I cannot see any possible reason why an end to free banking would be a step forward for customers. One argument put forward to support an end to free banking is that free current accounts pose a barrier to entry. Whilst this may be true on an technical level the logical conclusion would be to ban free banking so as to open up competition, as competition is always considered to be positive from a consumer’s point of view.
“That would be bizarre as how can charging for bank accounts that the majority of customers have enjoyed free for decades be in their best interests? This reminds me of when Sky was forced to relinquish its rights to all Premier League football broadcasting rights – Sky showed less football for the same price and rival broadcasters charged separately for their matches, meaning the consumer had to pay more to watch the same amount of football. Although this situation is entirely different, consumers’ best interests can only be served by continued free banking. As for the boss of Barclays, he’s had his say and can now return to his ivory tower.”
David Ingall, UK200Group past president
“Now that is a surprise, the boss of a major bank proposing the end of free banking because it is a step forward! Banks have generally given up on paying interest on current accounts, introduced charges for a variety of other services and now don’t want to give you any benefit from being in credit.
“The marketplace for so many things is already skewed thanks to government intervention and now Mr Jenkins argues there should be yet another ‘spiffing idea’. One can envisage that a few years hence there will be a major row about the charges that banks levy on their customers. Mr Jenkins, live in the real, competitive world, because if your wish is granted your successors may well rue your proposal.”
Carolynn Pissarro, partner, UK200Group member firm Griffin Chapman
“How would customers benefit from being charged for something that is currently free?”
Established in 1986, UK200Group is the leading mutual professional association in the UK with some 150 offices of quality-assured member accountancy and lawyer firms throughout the UK totalling over 550 partners, 150,000 business clients and global links in over 50 countries. UK200Group provide services and products that are designed to enhance the business performance of its members. Telephone 01252 401050, email firstname.lastname@example.org or visit www.uk200group.co.uk
Disclaimer:UK200Group is an association of separate and independently owned and managed accountancy firms and lawyer firms. UK200Group does not provide client services and it does not accept responsibility or liability for the acts or omissions of its members. Likewise, the members of UK200Group are separate and independent legal entities, and as such each has no responsibility or liability for the acts or omissions of other members.
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