The end of free UK current accounts?

The end of free checking gathers pace.

On 24 May, Bank of England executive director for banking supervision Andrew Bailey said that the "myth" of free banking enjoyed by customers when not overdrawn made it hard to link costs to products and services received.  UK current account customers will not warm to his argument or its likely implications but the High Street banks will welcome the argument to end free checking if-in-credit.

It is a trend already being endured by customers in Ireland. If you think that the banking crisis was bad in the UK, spare a thought for customers across the Irish Sea. Following a sector wide crisis in 2008 – the cost to the Irish taxpayer so far is about €70bn, give or take - six Irish owned banks have become two so called ‘pillar banks’. The big two (pillar) banks left standing – Bank of Ireland and Allied Irish Banks - are now rewarding taxpayers for their support by ramping up fees for everyday banking for a sizeable proportion of the country.

Bank of Ireland kicked things off by raising fees affecting almost one-half of its 1m customers in March. AIB has come out in sympathy and will follow suit with the end of universal free checking from 28 May. Only Royal Bank of Scotland-owned Irish subsidiary, Ulster Bank, now offers universal free current accounts. It does not however rule out following Bank of Ireland and AIB.

Ulster Bank spokesperson Debbie McCaughey said:

"I can confirm that Ulster Bank does not charge a monthly fee on standard current accounts. As with all our products and services, we keep our current account offering under continual review."

So we now have the irony of the UK government bailed-out RBS Irish subsidiary standing to win over account switchers from the two Irish government-backed lenders, Bank of Ireland and AIB. There is one further irony. Bank of Ireland has not (at least not yet) ended universal free if in credit current accounts for its customers based in Northern Ireland.

In fairness to Bank of Ireland, a lot of its customers can get around the monthly current account charges. If, for example, they deposit at least €3,000 into their current account and make nine debit payments from that account using the telephone or online banking over a three month charging period, they will avoid charges. Students and customers aged over 60 are also exempt. In addition, customers who maintain a permanent credit balance of at least €3,000 (a relatively small percentage of clients) qualify for free banking. Customers not qualifying for free banking will pay €0.28 per transaction or a flat fee of €11.40 per quarter for up to 90 transactions with excess transactions charged at €0.28 each.

AIB’s fees strategy is worse – much worse. AIB spokesperson Helen Leonard told me that the fees change “is driven by the need to enhance cost recovery across all AIB businesses, including the provision of money transmission services, the cost of which is significant.” So from 28th May AIB will seek to recover some of the losses it incurred following the crash by imposing current fees for customers who do not maintain a minimum daily credit balance of €2,500 for the full fee quarter on a personal current account.That will take in 60 per cent of its current account customer base. The 40 per cent of exempt customers will, in the main, be the other exempt customer categories: students, recent graduates and clients aged over 60. The 60 per cent of AIB customers affected will be charged €0.20 per debit card transaction while writing a cheque or withdrawing cash at an AIB branch will cost €0.30 per transaction.

In a statement, Bernard Byrne, director of personal and business banking at AIB, said:

"Free banking offerings across the industry have changed significantly in recent times. While this was a difficult decision to make, nonetheless it is a necessary one if we are to continue to create the conditions in which we can become a strong and viable entity again."

The fees bombshell for Irish bank customers follows an incessant stream of bad news in the local banking sector. Around 6,000 banking staff in Ireland have left the industry in the past three years. Thousands more are set to follow with AIB looking to shed another 2,500 jobs; Bank of Ireland will let up to another 1,000 staff go under a voluntary redundancy scheme agreed with trades union The Irish Bank Officials Association.

Ulster Bank is also bloodletting and will lay off 950 staff in the short to medium term.UK High Street lenders will be watching intently to see if Bank of Ireland and AIB can make the current account fees stick.With such limited competition on the Irish Main Street, there is every chance that Irish customers –or at least those who do not switch to Ulster Bank - will just grin and bear it.

In the UK, there are already 10m chargeable current accounts, with customers paying an average of £185 in fees per year.That is already worth big bucks to UK banks: about £1.8bn in fees last year across the sector.But such accounts are termed packaged accounts (or added value accounts, as banks prefer to call them) and typically offer a bundled range of incentives such as mobile phone insurance and car insurance, other preferential financial services including overdraft, personal loan or mortgage, as well as non-financial products and services.

There were approximately 54m active current accounts in the UK in 2011 and packaged current accounts made up about 17 per cent of the UK retail banking market. The number of charged for current accounts on offer in the UK (69) has more than doubled from the 33 on the market just five years ago and since late 2009 has exceed the number of free in-credit current accounts on the market. Thus far, no UK bank has gone for broke and made the decision to start charging for all current accounts for fear of losing market share. With encouraging noises off from Andrew Bailey – and a bank sector enthusiastic about finding new ways to charge for services currently not charged for - that day may not be far off.

Douglas Blakey is the editor of Retail Banker International.

Bank of Ireland: Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

Photo: Reuters
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Murder by numbers: the legacy of the Grenfell Tower fire

It is difficult to refute the reality of suffering when the death toll is still being reckoned.

How do we measure human malice? Sometimes it’s all too easy. This summer, British cities are struggling through the aftermath of successive terrorist attacks and hate crimes. The Manchester bombing. The Westminster Bridge murders. The London Bridge atrocity. The attack on people outside the Finsbury Park Mosque in north London and on other mosques. The unidentified young men who are still at large in the capital after spraying acid in the faces of passers-by, mutilating them.

In Britain, we are commendably resilient about these things. Returning to London after some time away, I found my spirits lifted by an issue of the London Evening Standard magazine that celebrated the ordinary people who stepped in to help after these atrocities. The paramedics who worked through the night. The Romanian chef who offered shelter in his bakery. The football fan who took on the London Bridge terrorists, screaming, “Fuck you, I’m Millwall!” The student housing co-ordinator who rushed to organise board for the victims of the inferno at the Grenfell Tower and their families.

Wait. Hold on a second. One of these things is not like the others. The Grenfell Tower disaster, in which at least 80 people died, was not a terrorist or malicious attack. It was the result of years of callous council decisions and underinvestment in social housing. On 14 June, entire families burned alive in their homes partly because, it is alleged, the Royal Borough of Kensington and Chelsea would not pay the extra £5,000 or so for fire-resistant cladding. Nor could it find the cash, despite a budget surplus, to instal proper sprinkler systems on the rotting interior of the building.

Kensington and Chelsea is a Tory borough that, in cash terms, cares very little for poorer citizens who are unlikely to vote the right way. In 2014, while the Grenfell Tower residents were refused basic maintenance, the council handed out £100 rebates to its top-rate taxpayers, boasting of its record of “consistently delivering greater efficiencies while improving services”. Some of those efficiencies had names, and parents, and children.

This is a different sort of depravity altogether. It’s depravity with plausible deniability, right up until the point at which deniability goes up in flames. Borrowing from Friedrich Engels, John McDonnell described the Grenfell Tower disaster as “social murder”. The shadow chancellor and sometime Jack Russell of the parliamentary left has never been known for his delicate phrasing.

Naturally, the Tory press queued up to condemn McDonnell – not because he was wrong but because he was indiscreet. “There’s a long history in this country of the concept of social murder,” he said, “where decisions are made with no regard to the consequences… and as a result of that people have suffered.”

It is difficult to refute the reality of that suffering when the death toll is still being reckoned from the towering tombstone that now blights the west London skyline.” As the philosopher Hannah Arendt wrote, “The sad truth is that most evil is done by people who never make up their minds to be good or evil.”

Market austerity is no less brutal for being bloodless, calculating, an ideology of measuring human worth in pennies and making cuts that only indirectly slice into skin and bone. Redistributing large sums of money from the poor to the rich is not simply an abstract moral infraction: it kills. It shortens lives and blights millions more. Usually, it does so in a monstrously phlegmatic manner: the pensioners who die early of preventable diseases, the teenagers who drop out of education, the disabled people left to suffer the symptoms of physical and mental illness with nobody to care for them, the thousands who have died on the waiting lists for state benefits that they are perfectly entitled to, the parents whose pride disintegrates as they watch their children go to school hungry.

We are not encouraged to measure the human cost of austerity in this way, even though there are many people in back offices making exactly these sorts of calculations. This year, when researchers from the Journal of the Royal Society of Medicine claimed that “relentless cuts” to the health service could explain as many as 30,000 “excess deaths” in England and Wales in 2015, the government denounced this as “a triumph of personal bias over research”, which, however you slice it, is a callous prep school debater’s response to the reality of 30,000 fresh graves.

There is a species of evil in which an individual allows the dark and yammering corners of his mind to direct him to put a blade in a bystander’s belly, or a bomb in a bustling crowd of teenage girls. That sort of monstrosity is as easy to identify as it is mercifully rare, though frighteningly less rare than it was in less febrile times. But there is another sort of evil that seldom makes the headlines. This comes about when someone sits down with a calculator and works out how much it will cost to protect and nurture human life, deducts that from the cost of a tax rebate for local landowners or a nice night at the opera, then comes up with a figure. It’s an ordinary sort of evil, and it has become routine and automated in the austerity years. It is a sort of evil, in the words of Terry Pratchett, that “begins when you begin to treat people as things”. 

The Grenfell Tower disaster was the hellish evidence of the consequences of fiscal ruthlessness that nobody could look away from. Claims that it could not have been predicted were shot down by the victims. The residents’ association wrote on its campaign website after years of begging the council to improve living conditions: “It is a truly terrifying thought but the Grenfell Action Group firmly believe that only a catastrophic event will expose the ineptitude and incompetence of our landlord.”

That catastrophic event has happened, and the ordinary British response to tragedy – brave, mannered dignity – is inappropriate. When the Grenfell inquiry launches next month, it is incumbent on every citizen to call for answers and to call this kind of travesty by its name: murder by numbers.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

This article first appeared in the 20 July 2017 issue of the New Statesman, The new world disorder