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Is there no such thing as 'free banking'?

Published 29 November 2011 by

Britain's most senior banking supervisor has said "there is no such thing as free banking", launching a debate about bank account fees and charges.

Director of banking at the Financial Services Authority (FSA), Andrew Bailey, made the comments at a conference on the future of banking. He said: "There is of course no such thing as free banking. What it really stands for is that charges are levied inconsistently across products supplied by banks, with the consequence that some appear to be free. It also leads to what in my view are unhelpful and damaging decisions."

Mr Bailey said that complex pricing that could mislead banking customers should be replaced by more transparent banking charges. He continued: "The philosophy should be, give the public what they want but at a fair price which is transparent to them."

Many High Street banks have faced long-standing criticism for complicated charges and fees structures. Furthermore, research has revealed that banking customers are paying more than ever before to have their finances managed by the major banks.

Research by the Office of Fair Trading (OFT) in 2008 estimated that the banks earned £8.3 billion in revenues from personal current accounts in 2006 - with the average revenue from a current account adding up to £152 per customer every year.

However, some account providers offer accounts which, although they require a monthly fee, don't come with any hidden charges or fees for bounced or late payments. The thinkmoney Personal Account is an example of one of these. For more information, you can take a look here. </p

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