Defaqto: ‘2yrs of free banking left’
February 21, 2007 by admin
Filed under News, News-Banking
The end of free banking could be upon us within just two years, according to leading research firm Defaqto.
According to the company, the backlash from increased pressure on banks to reduce penalty charges could see consumers being charged a tariff for their bank accounts.
Defaqto says that this could rear its head as either a monthly fee or a pay-as-you-go system, which would see customers charged in relation to how often they use their account.
Any system like the latter could leave vulnerable people in a worse situation than they are currently in, especially if additional charges are added for the processing of things like cheques or discounts are offered to those using other bank services.
The UK has enjoyed free banking for 23 years, but Defaqto warns that the banks have to make up the money in some way.
“I will be very surprised if free banking is universally available in two years time,” said David Black, head of banking at Defaqto.
“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead.
“I would then expect to see a significant increase in account switching as well as many people closing their secondary accounts,” he added.
The UK is currently internationally unique in not charging customers for current accounts.
