Bank bosses have sparked fears that free current accounts could soon become a thing of the past in Britain.
HSBA.L) Noel Quinn has warned that the lender could be forced to start charging customers for basic banking services, while the boss of NatWest failed to rule out introducing charges in future.” data-reactid=”24″ type=”text”>The chief executive of HSBC (HSBA.L) Noel Quinn has warned that the lender could be forced to start charging customers for basic banking services, while the boss of NatWest failed to rule out introducing charges in future.
“We’re committed in the UK to offering the basic bank account, which is a fee free basic bank account, but we will look in all our markets at the appropriate pricing strategy for fees,” Quinn told journalists on an earnings call this week.
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Alison Rose, the chief executive of NatWest Group, said her bank had “no current plans” to start charging fees for retail banking services, but failed to rule out future changes when pressed by journalists.
The comments have led to fears that Britain’s banks could start introducing fees for basic services such as cash withdrawals and money transfers.
“If one does it, all the others will jump at the chance,” said Sarah Kocianski, head of research at financial services consultancy 11:FS.
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Britain is relatively unusual in offering fee-free banking as standard to retail customers. In Europe and the US, most banks either charge customers for current accounts or charge for services such as cash withdrawal and money transfers.
The competitive nature of the UK banking market and the country’s large economy has meant banks have so far avoided charging fees. Lenders make enough from other products, such as mortgages and business loans.
But ever declining interest rates are putting pressure on profits. Banks make most of their money through net interest margin — the difference between the rate paid out to savers and the rate charged to borrowers. The collapse of interest rates in the decade since the financial crisis has squeezed this margin.
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“There’s clearly pressure on the current model in the lower for longer interest rate environment,” NatWest boss Rose said on Friday. “It’s one of the reasons why we’ve introduced current accounts that offer a level of service and benefit that our customers are willing to pay for.”
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