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May 25, 2012 / politicsbitesize

Free bank account? Think again!

The banks generate around 20% of the UK’s Gross Domestic Product and without them our country would collapse. We can’t punish them for the banking crisis that has brought the world to its knees and is causing suffering for millions because if we do they’ll all just leave! So, we, as a country, sit and we leave them alone. But will that last?

Andrew Bailey, executive director of the Bank of England, called today (Thursday 24th May 2012) for an end to free current accounts. In his speech to the Westminster Business Forum he described ‘free banking’ as a ‘myth’ because he claims it doesn’t reflect the true situation. Bank customers who don’t already pay a fee on their current accounts are being charged for other services in ways they might not even notice.

He claims customers aren’t aware of how they are really paying for their banking services and that banks too may not properly understand the pricing structure of their products. This in turn means banks ‘might’ be more inclined to mis-sell products, as they did with PPI in recent years, in order to boost their profits. Mr Bailey, the soon-to-be top regulator in the City, believes that the solution to this problem is to end free current accounts.

A better solution might be to simply train banking staff properly so that all members are fully aware of the pricing structure of each product they sell. Another response to the situation could be to change to a more ethical business model, which might reduce the propensity for banks to push products simply to make a profit. Imagine a bank that only supplied their customers with what they needed?

The millions of UK banking customers who currently have a free bank account are likely to be furious about any attempt to introduce fees for basic banking services. But be warned, Andrew Bailey has described himself as a ‘dog with a bone’ on this issue and would like to see regulatory intervention imposed in order to bring about this change.

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