Posted by Richard Willett - Memes and headline comments by David Icke Posted on 15 March 2024

Lending people money that doesn’t exist is not enough: FCA ‘won’t stand in the way’ of an end to free banking, says boss

The boss of the Financial Conduct Authority has said the regulator would ‘not stand in the way’ of banks opting to charge customers to hold accounts.

Many City firms are concerned about spiraling costs in the wake of regulatory changes, which are also forcing some to shift their business models.

Nikhil Rathi, the FCA’s chief executive, said on Thursday the regulator understood these complaints but stood by its focus on retail protection via its Consumer Duty rules.

He told the Morgan Stanley European Financials Conference on Thursday: ‘We have always been clear that if business models need to change in response to competition and a changing market, we would not stand in the way.

‘The “free-if-in-credit” banking model in the UK is a market and commercial decision not a regulatory requirement, other than for basic bank accounts.’

At present, most savers do not have to pay any sort of monthly or annual fee to open or maintain accounts like current or savings accounts.

However, some providers already charge fees to maintain bank accounts. Taking one example, savers using the Santander Edge Up current account are charged a £5 monthly fee to maintain it.

Rathi said many other countries already imposed fees on current accounts.

While some providers already impose fees to maintain certain accounts, responses to Rathi’s speech were mixed.

Simon Youel, head of policy and advocacy at Positive Money, said he was ‘extremely concerned’ by Rathi’s comments on the UK’s free banking model.

Youel added: ‘Banks’ margins are hardly being squeezed, with lenders enjoying record profits driven by higher interest rates which they’ve withheld from depositors.

‘It is bad enough that banks are cutting access to in-person services with branch closures – cutting access to free current accounts as well would be another big slap in the face to the public.’

Rathi, who has led the FCA since October 2020 after succeeding now-Bank of England Governor Andrew Bailey, said the application of the Consumer Duty could also cut compensation levies imposed on financial firms.

He said the regulator would be ‘pragmatic’ when enforcing rules, tackling breaches that pose the greatest risk of harm but looking ‘favourably on firms that have made reasonable efforts to address concerns’.

The FCA will, in this regard, focus on cash savings markets, both in the largest banks and on platforms, insurance products such as premium finance, and gap asset protection insurance, known as Gap insurance.

Gap insurance covers the difference, or shortfall, between the current market value of your car and the price you originally paid for it.

Read More: FCA ‘won’t stand in the way’ of an end to free banking, says boss

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