Deathwatch: Free banking?


According to a report from PriceWaterHouseCooper, they think that free banking could be dead within 10 years of you reading these words. They think that banks will see free banking as 'unsustainable' with customers being asked to pay subscriptions of £10 per month instead.

If you're thinking of refusing to pay the charges, then it is assumed that banks would then place restrictions on withdrawals and using branches, and the like.

Steve Davies, the retail banking leader at PwC, thinks that paying for current accounts as standard could get rid of the control the big banks currently have on the market in the UK and bring about a more transparent and better service.

He says: "UK current accounts are not free at all and are paid for through overdraft charges, penalty fees and uncompetitive or zero rates of interest. The free banking model stifles innovation and competition."

"It requires new challenger banks to achieve scale very quickly if they are to survive and it fails to reward banks that come up with new ideas as costs cannot be recovered," he added

And the Competition & Markets Authority have said that most people can't be bothered to change banks because it is too difficult to work out which is offering the best deals.

Andrew Bailey, head of the Bank of England's Prudential Regulation Authority, is on record as referring to free banking as a 'dangerous myth'.


  • patrick
    Banks can easily afford to subsidise free banking -- it's becoming even cheaper with internet banking (no postal statements) and diminishing bank branches. They only want to bring in charges so they can further inflate their profits. I saw this happen in New Zealand - service did not improve but banks profits increased considerably. For true competition we need portable account numbers so people can easily switch banks without having to redo direct debits and move salary payments. Banks claim this is too difficult to implement - it isn't. All bank systems are computerised and can be programmed to cope with portable account numbers. The mobile phone industry complained it was too difficult but manages just fine now they've implemented it.
  • LoisHamAlTone
    So. If you are poor and have little to no money in your bank account, you will end up 10 pounds a month poorer. You don't care about the rates of interest, because your account is always empty. However if you say have some savings in the bank account, you would have to have over 7000 pounds to get the 10 pounds a month back, at say, for example a low rate of 2% or less. Basically, the banks want to riffle through the pockets of the poor but sensible, who are living within their means and charging them a 'being skint tax', because they are not getting any money off them. And offering a new way for those with a bit of cash handy increase their wealth. It can be expensive being poor, and its going to get 10 quid a month more expensive too.
  • jim
    screw banks and bankers. they are scum. they mess up the world with their crashes and "mistakes" - yeah like they didnt know it was going to happen. they do all kinds of dirty deals in the background - but Oh we have to have our Bonus! grrrrrr rant rant rant rant
  • George C.
    Internet banking means your money can be -- already is -- anywhere and nowhere, baby. So if UK banks start charging, use an Asian bank that doesn't. The UK banks love competition so they won't mind at all.

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