BKL corporate finance partner Daniel Shear has commented via the UK200 Group on remarks by Barclays chief Antony Jenkins on charging for bank accounts.
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.