Free business bank accounts and no-fee personal bank accounts could soon be a thing of the past, according to one UK financial expert.
As banks and building societies have provided the majority of their financial products free of charge, the lion’s share of UK consumers have long grown accustomed to using their personal finance options, such as their current accounts, without fear of incurring any kinds of fees. However, Kieth Churchouse Financial Planning’s director, Keith Churchouse, said that the tides may have turned in the coming months as personal and business bank account providers choose their reactions to a recent report by the Independent Commission on Banking.
The Commission, which was set up by the government in 2010, with Sir John Vickers at the helm, recently came forward with a wide range of recommended changes to the UK banking industry. These recommendations have been accepted by chancellor George Osbourne.
Specifically formulated to aid in the prevention of issues that were seen during the worldwide economic downturn from happening again, these measures include requiring banking providers to ringfence their retail branches – and by extension the deposits of their customers – from any any sort of so-called ‘casino-style’ investment activities. This will prevent any possibility that consumers’ hard-earned cash being utilised for any future bailouts.
Additionally, banks and building societies are expected to simplify bank account switching procedures for customers. Mr Churchouse remarked that this new regulation could lead to banks either increasing the prices associated with their banking services, or bowing out of the UK market altogether.
The banking industry insider said that the costs associated with these new regulatory measures is estimated to total approximately £1 billion. This will reduce viability for many lenders unless they introduce charges to their banking products, Mr Churchouse added.