Britain’s biggest banks are likely to move in lockstep if they decide to introduce paid-for current accounts, experts have warned – quickly leaving customers with little option but to swallow fees.
HSBC said this week that it could charge for basic banking services in some markets after losing money on a “large number” of customers due to ultra-low interest rates.
Analysts are now saying that other banks would follow suit rapidly once the first decides to introduce fees, meaning the number of free accounts available could fall dramatically in a matter of weeks.
Industry profits are already being squeezed by record low interest rates that could soon be cut into negative territory, meaning banks would be charged for hoarding cash instead of lending it out.
Simon Westcott, a financial services expert at PwC, predicted that “the industry would seek to move quite quickly together” if one bank starts charging.
He said that banks would likely seek to avoid a sudden surge of customers from paid-for accounts into unprofitable free ones, and the best way of avoiding this would be to introduce charges of their own.
One source said that charging for basic banking is one of a number of options being discussed by lenders as they prepare to respond in a Bank of England consultation on sub-zero rates.