Nationwide rules out charging customers for everyday banking after holding secret review
Nationwide has ruled out charging customers for everyday banking after holding a secret review.
Britain’s biggest building society is understood to have assessed a range of options for its eight million current account holders – including adding fees – earlier this year.
However, last night a spokesman said: ‘We have no current plans to introduce any new charges on current accounts.’
Review: Britain’s biggest building society is understood to have assessed a range of options for its eight million current account holders
Banks including HSBC and Virgin Money have raised the prospect of adding charges to basic current accounts, which have generally been free since the 1980s. Some accounts that have added perks such as insurance tend to involve a charge.
The Bank of England has hinted in recent weeks that it could cut the bank rate from 0.1 per cent to below zero for the first time in its 326-year history. Negative rates will make it harder for banks to turn a profit on lending, leaving them scrambling for income from other parts of their businesses.
Nationwide, which has a tenth of the current account market, said it would be able to ‘withstand the financial impact of negative rates for longer than our main high street competitors’.
It said this is because it tends to pay more interest on savings accounts than its rivals and so it can reduce those rates rather than bring in extra charges.
The building society thought it would not be ‘palatable’ for a lot of customers to be charged for something which has long been free, a source said.
Advisers have been looking at ways that bank customers can be charged for some parts of everyday banking – such as paying for paper statements and for lost debit cards.
Banks argue that current accounts are expensive to run. It is understood that HSBC spends about £70million a year on sending mail to its customers.
Sources said all of the ‘Big Four’ banks – HSBC, Barclays, NatWest and Lloyds – are ‘seriously considering’ how to charge for everyday current accounts.
Richard Kibble, head of banking at Deloitte, said: ‘Banks have faced low rates for ten years and it hasn’t happened yet.
‘Banks ultimately fear they could lose market share and deposits if they made this move first.’
It is thought that regulators would pressure banks to protect customers with lower incomes if they started introducing charging for basic banking.