The chief executive of the UK-based Royal Bank of Scotland (RBS), Ross McEwen, has claimed that free banking could come to an end in the near future.
Speaking to The Telegraph, he explained that the end to free-if-in-credit banking would create a greater level of transparency around how banks fund themselves. The boss of the major high street UK bank went on to note that there are currently no plans to phase out free accounts at this moment in time.
“I think that’s where it’s going to end up longer term in this industry, as customers realise they are going to pay for it [current accounts] in some shape or form. It’s around transparency. If that’s the most transparent way of doing it, the industry will end up there.”
The provision of free banking to customers has been debated for a long period of time, with banks around the world creating a range of premium accounts that customers are required to pay for.
Critics have also claimed that free banking has become a barrier to competition and can prevent some more financially aware customers from understanding what they are being charged.
A number of prominent figures in the industry have claimed that an end to free banking is likely in the future, as the concept is something of a myth.
The Commons Treasury Select Committee has already said that it supports current account charges. Its chairman, Conservative MP Andrew Tyrie, declared that introducing fees would allow customers to compare rival bank accounts more easily.
He said: “Millions of retail customers deserve more choice and competition from the banking services they use. Ross’s remarks are a step in the right direction to securing more competition, which is a regulative objective they [the regulators] can and should help take forwards – the sooner the better.”
In 2010, the select committee published a report that recommended the end of free banking accounts, as the improved disclosure of information on cost is a pre-condition to greater competition.
By Asim Shah