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LibDems tell banks to restore trust before ending free banking

London UK Thames Parliament 480

Liberal Democrat Treasury spokeswoman Baroness Susan Kramer has told banks to forget about an end to free banking until they have restored public trust.

Speaking at a Social Market Foundation fringe event on competition in banking at the LibDem conference in Brighton this week, Kramer admitted there is a legitimate argument to charge for current accounts to prevent misselling.

She said: “There is an argument to be had about whether customers pay for individual accounts and services instead of it being packaged up in extraordinary ways meaning people who do not need many services are being subsidised by those who do.

“But the banks have to recognise it cannot happen until trust is restored. The banking industry needs to take restoring trust on board in the way it behaves on a daily basis. There has to be a rethink of banking culture and a focus back on customers’ needs and service rather than viewing the customer as a potential market to sell to. An awful lot has to happen before an end to free banking.”

In August, Barclays chairman Sir David Walker said free banking was the cause of misselling scandals at banks in the past decade. Bank of England executive director Andrew Bailey said free banking is a “dangerous myth” and must be changed.

Kramer is a member of the Parliamentary Commission on Banking Standards which is set to provide the Government with recommendations for its banking reform bill by 18 December. It will begin scrutinising the draft banking reform bill from 8 October.

If I Were You chief executive Rob Clifford says: “Banks need to make sure consumers know what they are getting for free and what they are paying for. I think this is a subtle but important difference to outlawing free banking.”

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