Santander has backtracked on plans to start charging existing small business customers with a ‘free banking forever’ account.
The bank came in for criticism after announcing in July that it would start charging either £7.50 or £12.50 for the previously free account. Santander has now staged a U-turn after considering feedback from its business customers and will send out letters next week to explain the situation.
Santander said that a ‘small number of existing customers’ did not feel their businesses would benefit from the changes so it would maintain the fee-free option for them, although they will still be able to ‘upgrade’ to the fee-charging bank account if they wish to.
The ‘free banking forever’ account, which serves around 230,000 small business customers, has not been available to new customers since November last year when the account was replaced with a fixed-fee account. Santander said that the monthly fee brings service benefits such as branch access and additional support.
Santander bows to customer demands
Had Santander opted to stand by its decision to start charging existing customers it could have faced a customer backlash and with it mounting costs.
Each customer complaint to the Financial Ombudsman Service (FOS), would have cost Santander £500 to cover administration fees.
Santander could also have faced claims of mis-selling, as it may have had difficulty justifying the new charges, given that its marketing material clearly promoted the free banking forever.
Confidence in banks at rock bottom
Last week Which? called on the British Bankers’ Association (BBA) to restore consumer confidence in the banks in a letter to its new chief executive.
Trust in the banking sector has reached an all-time low. Almost three quarters (71%) of people don’t think it has learnt its lesson from the financial crisis – up from 61% a year ago.
Which? is urging its new chief Anthony Browne to seize the opportunity to transform an industry that consumers believe has lost its moral compass following bank bail-outs, payment protection insurance mis-selling and the Libor rate-rigging scandal.
Which? wants to see the BBA working with the banks to reform their practices and take real action rather than waiting for changes to be imposed on them.
- Find the best bank account – read our helpful guide to bank accounts
- Fee charging bank accounts – we explain how they work
- Watchdog not lapdog – find out more about our campaign for a strong financial regulator