UK banks to end free banking?

26 February 2007

A top British bank chief has further fuelled speculation that UK retail banks are to begin charging for current accounts.

Eric Daniels, chief executive of Lloyds TSB, has hinted that forthcoming regulations from the regulatory body the Office of Fair Trading, which are expected to curb banks ability to charge overdraft fees, will force the banks to abandon free banking.

His comments come after last week's remarks from Nationwide Building Society chairman Graham Beale. Asked about the prospect of ending of free banking in The Sun newspaper, he said: "It's not free to run an ATM or a branch, so what it means is that when you apply charges to delinquent accounts they bear the large proportion of that cost. In an ideal world, the costs would be shared.

"If the industry changes its approach, we will follow."

The UK is currently one of a tiny minority of countries where banks do not charge customers to hold a current account, after fees were scrapped just over 20 years ago.

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