Barclays’ new chairman Sir David Walker says he agrees “in principle” with the end of free banking and believes charging for bank accounts may have avoided recent UK misselling scandals.
In his first interview as chairman, Walker told The Sunday Telegraph that widespread misselling of products such as payment protection insurance and interest rate swaps was “the consequence of not charging for bank accounts”.
He said: “Because banks are not charging, it drives them inexorably into this sort of position.”
Walker, who carried out a review into banking in 2009 and jointly reviewed the FSA’s report into the failure of Royal Bank of Scotland last year, was appointed to the chairman role last week.
His comments echo those of Bank of England executive director Andrew Bailey, who warned free in-credit banking was a “dangerous myth”.
Speaking in May, Bailey said: “I worry the banks may not properly understand the costs of products and services they supply. And I worry also this unclear picture may have encouraged the misselling of products that is now causing so much trouble.”
Evolve Financial Planning director Jason Witcombe says: “Current accounts are being run at a loss in most cases, so banks want to get their pound of flesh from elsewhere. But I am not convinced the fact that people do not pay for bank accounts should be an excuse for misselling, or that banks would not have been so aggressive in selling other products if customers had been paying for bank accounts.”