Financial Channel

Quote:They used to have monthly charges till one bank started free banking. I think it's going round in circles. You can't beat competition.I don't think banking will cease to be free, but the banks are definitely changing emphasis - fee-charging accounts are becoming more advertised as the norm, with heavy ad campaigns, and heavy up-selling...Free-banking could shrink to crappy basic accounts with hardly any features...Are bank required to proivde debit cards and direct debit facilities? Plus they could make the service for such accounts so crap... Then again, the banks that do offer debit cards and direct debits would steal from those that don't. Competion rules OKIn my personal opinion, I do believe that we will move towards a fee based system of banking, similar to business accounts at the moment. However, I don't see it happening within the next few years at the moment.I can tell you honestly that it IS a route banks are considering taking.

And the fee's recouped from charges would pale in comparison to those made by charging for accounts. And in that way, everyone loses out.I think everyone I know who works for banks and are aware of the charges issue believes that will happen but as to how it will work is a different matterPart of the problem is that whoever is first to introduce the fees would likely lose a lot of customers right there, so we'd be potentially facing a cartel situation, where one bank announces a date for the introduction of fees, then all the other banks follow suit within weeks announcing the same date.

Why aren't the OMM (or Competition Commission, or whatever they're called these days) looking into this?"And the fee's recouped from charges would pale in comparison to those made by charging for accounts. And in that way, everyone loses out" - quote from 'One of Them'.

And does that then make it alright?!!@**!!

Just take your 'bank hat' off for one minute and look at this with a 'legal' hat on, because I don't think you really, really get it. It is not equitable to take excessive amounts of money - (just because you can) from 'Peter', so that it puts you into the delicious position of offering free banking to 'Paul'. This is plain good old common sense based on more than 500 years of UK contract common law. If you breach your contract with me, I cannot, repeat cannot, claim back all sorts of monies because of your breach - not even loss of expectation (ie. if I was due to make shedloads of money from our contract). I can only claim my realistic losses. THAT'S IT. And banks are under the same laws as we are. Believe me - this is true. I have had the benefit of studying contract law and consumer law during my LLB and these basic principles apply to every one of us and every organisation out there under the jurisdiction of England and Wales.

NOW, how the banks recoup this money is a different matter. And, no doubt, they will be looking at removing free banking. Sorry but I for one, would prefer that, to knowing that my free banking was courtesy of someone elses misfortune.In the 1980's banks charged for accounts until HSBC removed account charges for having account. When one goes all will go and charges will go down, in my humble opinionI would prefer my bank to charge me a monthly fee , above board (and all the bonuses - free holiday insurance or whatever) than sneakily get money out of me using charges. There are plenty of us here who have had charges of over ?50 a month - i cant imagine many people would open an account with a monthly fee that big.I think banks will continue to offer free banking, but only to those either maintaining a certain balance, using other bank products or crediting a certain amount each month. Everyone else would probably have to either pay, or get a rubbish type of account.

To be fair, i don't think banks would mind losing a lot of their customers - the ones who never have any money in their accounts actually cost the bank money, so if those customers close their accounts, the banks won't care. One bank I have worked for could tell how much profit they made from an individual customer - if this was negative, we wouldn't argue if you said you wanted to close your account.When you go into a shop and buy something with your debit card, the banks charge the store.

If they want to keep taking that money from stores, they've got to keep their customers.

I'm sure that if UK banks introduce charges, someone will find they can run a bank at a profit without charging their customers for these transactions ... though they might charge for cheques and other transfers where they do not get paid by the recipient ... and we might even accept paying 50p for cash withdrawals from ATMs.

Tim