The free current account myth was recently destroyed after banking industry heads admitted to stealth-charging their customers.
Chiefs from some of the best business bank accounts in the UK recently admitted to the fees. However they told MPs that the fees their customers were paying amounted to the cost of a weekly cup of coffee.
What these chief executives failed to mention was that each cup cost around £2.90. This amounts to a yearly charge of approximately £150.
Financial services providers have traditionally marketed their current accounts as free due to no fees up front. Despite this fact these providers are raking in profits in the millions of pounds through interest rate manipulation.
Lloyds Banking Group admitted to the fees after a thorough dressing-down at the hands of MPs recently. The bank had been accused repeatedly of several unethical practises, including neglecting to make its charges more transparent and charging rates that MPs referred to as ‘exorbitant.’
The 41 per cent nationalised bank also faced accusation of monopolising the marketplace in regards to its profit margin. MPs are highly concerned with the chronic under-competitive nature of the banking community.
Lloyds dominates the current account market in the UK. Their market share consists of approximately 29 per cent, which translates to 24 million account holders.
One Lloyds rival admitted that they also participate in the behaviour. Brian Hartzer, retail director for the Royal Bank of Scotland, told the Treasury Select Committee that there never has been free banking in the UK.
Lloyds retail director Helen Weir also spoke to MPs on the Committee. She was the executive who compared the average weekly fee a current account customer pays to a cup of high-priced premium coffee.
Last year Ms Weir’s total pay package from Lloyds was £1.76 million.