Will HSBC move spell end of free banking?
FREE banking could be coming to an end as Britain’s biggest lender plans to introduce new charges for customers.
As coronavirus wreaks havoc on the financial sector, HSBC said it could start charging customers for services that were previously free in an effort to make more money.
It is the latest blow for account holders, who were already struggling with disappearing cash machines and bank branch closures.
In what could cause a seismic shift in the industry, HSBC has warned it may start charging for services as essential as current accounts.
As HSBC unveiled its results for the third quarter – a profit of £2.4 billion – chief financial officer Ewen Stevenson said: ‘We will have to look at charging for basic banking services in some markets, because a large number of our customers in this environment will be losing us money.’
The move provoked outrage among campaigners.
Former pensions minister Baroness Altmann said: ‘Bank customers tend to have lost out hugely as a result of Covid and now they’re likely to lose even more, while banks and institutional investors will have the power to do even better.
‘When are the banks going to realise that they need their customers? They can’t rely on just earning money from lending.
‘There’s also the worry that some of this is driven by the banks’ desire to start paying dividends to shareholders. It would be disgraceful if banks were to start paying dividends while charging customers for basic services.’
Lenders have been banned from paying dividends to shareholders since the pandemic hit, as regulators told them to hold on to as much cash as possible. But in an effort to appease irritated investors, HSBC announced it was hoping to pay a ‘conservative’ dividend at the end of the year, if allowed to by Bank of England regulators.
HSBC’s most popular products include its simple ‘Bank Account’ which allows customers to open a savings account, and its Premier and Advance accounts.
James Daley, of consumer group Fairer Finance, said: ‘I don’t think any bank could get away with charging customers to deposit money – there’s just no appetite for it among customers. But that means banks will start charging customers in ways that are less transparent. This could mean higher charges for using your card overseas, transferring large sums of money between accounts, maybe lifting overdraft charges.’