The parliamentary inquiry into the Libor fixing scandal may be used by the leading banks to end the system of free banking that UK customers have enjoyed for so many years.
In the UK, unlike many other countries throughout Europe and the world, most accounts carry no fees, and you are free to withdraw cash or hold money in an account at no charge. The alternatives to this are a flat fee charged on current accounts, requiring people to pay the banks to look after their money, or a percentage charge from withdrawing money.
This presents difficulties for those on low incomes who may find the cost of a bank account a real barrier to affording everything they need. A bank account can be a requirement for so many things that limiting the access to them in this way could cause substantial problems for large sections of the population.
However, the other side of the argument is that by allowing banks to charge for accounts, we will get a more honest system of banking that does not leverage unfair overdraft charges or squeeze out money using mis-sold Payment Protection Insurance (PPI). The banks will be able to use these funds to run their branches and will not have to seek to money in other, shadier ways.
The British public may not see it this way though, having grown so used to free banking being a reality. They also might not trust the banks to stop mis-selling them products and suspect them of simply taking the account charges in addition to profits they make in other ways, as Mike O’Connor of Consumer Focus warns: “What must absolutely be avoided is customers facing the worst of both worlds; paying direct fees but still facing indirect costs, poor sales practices and customer service.”
Regardless, it will be banks, politicians and the media that engage in this war, and we can only sit back and see what happens.