Counting the cost of ‘free’ banking: in response to Andrew Bailey

Andrew Bailey, who will soon become chief regulator of the financial services industry, has called for an end to free banking. The banks themselves have long been divided on this issue: on the one hand, they can sniff a brand new revenue stream from monthly current account charges, but on the other, they know that unless all providers introduced charges at exactly the same time (which is highly unlikely) there would be an enormous first-mover disadvantage as customers switch to accounts that are still offered for free.

If anyone can be expected to know the price of things, it is of course Andrew Bailey. You may recognise him from your wallet or purse – as the Bank of England’s Chief Cashier, his signature is on all of our banknotes. But Bailey’s advocacy of fee-charging accounts seems to be based on some rather dubious logic. And it seems certain that any such move would reverse some of the successes of the financial inclusion agenda in recent years.

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Image: Bank of England