Forex Marketz Daily Forex News – Fully Markets Update
Santander 123 current account fees rising to £5 in January
Large increase in fees by one of Britain’s biggest banks as the regulator
prepares proposals to ensure customers get good deals from current accounts
One of Britain’s biggest banks is almost trebling the charges on its main
current account, The Telegraph can disclose, as the regulator prepares to
intervene on current account rip-offs.
More than three million Santander customers will be charged £60 a year for
everyday banking services from January, up from £24 today.
Santander is also increasing the fees on its main credit card after EU laws
reduced the profits banks could make from each transaction.
The price rises are a blow to vast numbers of customers lured to Santander
from its “big four” rivals Lloyds, Barclays (LSE: BARC.L – news) , HSBC and RBS (LSE: RBS.L – news) .
Many were taken in by the attractive perks on its “123”
current account and credit card, and endorsements from experts such as
television money guru Martin Lewis.
Santander staff are being told the monthly fee on the current account will
rise from £2 a month to £5 next year. Customers will receive the news later
this week, it is understood.
For many, the higher charge will negate the current account’s benefits, which
include 3 per cent interest and cashback on bills. It (Other OTC: ITGL – news) may remain attractive
only to those with large savings pots.
Fees for the credit card, which offers up to 3 per cent cashback on spending,
will rise from £24 to £36 a year.
The changes may prompt rival firms to act and come just weeks ahead of
proposals to stop banks exploiting customers.
Critics said the moves “made a mockery” of the Santander’s
advertising strapline: “simple, personal, fair”.
James Daley, founder of bank account analysts Fairer Finance, said: “Santander
had been one of the few to offer a genuine alternative to the traditional
banks and as well as a blow for the millions of customers who were lured
in by its attractive offers, this will reduce competition in banking, which
is already weak.”
Around 17 million people have
banked with the same institution for at least two decades . The
Competition and Markets Authority (CMA) watchdog will next month publish a
two-year investigation into concerns that the
big four banks, which control three-quarters of all current accounts, offer
poor deals and service because they are not challenged .
Many of those who are switching are choosing the Santander 123 account because
it offers up to 3 per cent interest on balances between £3,000 and £20,000
and between 1 per cent and 3 per cent on household bills.
Mr Lewis, founder of MoneySavingExpert.com, has advised savers to use the
account instead of Isas, where interest rates have fallen to record lows.
When the 123 account was created in 2012 the best easy access savings rates
was 3.5 per cent; today it is 1.65 per cent.
Higher charges on the country’s most popular current account could allow other
banks to introduce smaller fees.
MPs and banking chiefs have already urged the CMA to bring an end to the
practice of “free” in-credit banking.
Andrew Tyrie, chairman of the Treasury committee, said free banking is a “misnomer”
because “no
one actually knows how much they are getting charged and this helps stifle
competition”.
Accountants PricewaterhouseCoopers said free
banking would disappear “within a decade” .
The Santander 123 credit card pays between 1 per cent and 3 per cent cashback
on spending in supermarkets, department stores and on travel.
The bank makes money from customer fees and by charging retailers for each
transaction. But from October, the maximum “interchange” rate
charged to shops will be 0.3pc of the purchase price, down from 0.7pc on
average today.
Capital One (Dusseldorf: 8CA.DU – news) has already scrapped the perks on its cards and Tesco (Xetra: 852647 – news) is cutting
its own in November. Santander will replace its £24 annual fee with a £3 a
month charge, it is understood.
