02/Sep/2014 - Last News Update: 10:01

Santander's free business banking is no longer forever

Category: Business

Published: 29th Jul 2012 17:08:09

About 230,000 small businesses that bank with Santander have been told that their accounts, supposedly free for ever, will now cost £7.50 a month.

The bank has been sending letters to the customers giving advance warning of the change, which will come into effect later this year.

Santander says the old accounts are "no longer viable".

Barry Daniels, who runs a small wedding car business from the village of Curdridge near Southampton, is not happy at all.

"I was shocked and horrified - I thought the free banking was for ever, as promised," he says.

Mr Daniels' business involves hiring out cars to wedding couples - either a 1935 Rolls Royce he restored himself, or a more modern Daimler.

The firm, Chartwell Wedding Cars, turns over about £10,000 a year.

Mr Daniels switched his business account from NatWest to the Abbey eight years ago, specifically to take advantage of the free banking offer.

"They were offering free banking forever," he points out.

"They didn't charge for cheques, they gave free envelopes to send off cheques, so everything you get is free."

The new charges will not be trivial, in his view.

"We are running along quite nicely as we are; £7.50 a month is £90 a year, which we could do without," Mr Daniels says.

"But I feel that once they have got us onto that, and they have got us off the free banking they could charge for cheques and everything, so we could end up in a horrendous situation where we pay a lot of money every month," he explains.

The accounts in question are largely ones that Santander has inherited from banks it has taken over in the past - the Abbey and the Alliance & Leicester.

It is not viable to offer them more, for free”

Santander argues that the impending account changes mean the customers will receive an improved service in exchange for the new monthly fees.

For instance, there will be more business managers to talk to in local Santander branches.

A higher rate of interest, 0.25%, will be paid on balances held in the business current accounts.

And all business customers will be able to operate their accounts in Post Office branches. Previously, this benefited only Alliance & Leicester business customers.

"Our business customers have told us they require more," a bank spokeswoman says.

"The majority of our customers will see that this account is highly competitive and gives them the all-round service they demand so that they can concentrate on growing their businesses.

"It is not viable to offer them more, for free," she explains.

Santander continues to offer a free banking account to new start-ups, but usually only for 12 months.

The word "forever" is emblazoned in big blue letters on the brochure Mr Daniels was given by the Abbey back in 2004.

So the recent Santander letter telling him that his account is being changed with the application of a new monthly fee is in clear contradiction to its original marketing promise.

What can he do about it?

Both the Financial Ombudsman Service (FOS) and the Financial Services Authority (FSA) have advised him to complain to Santander in the first instance, and seek an answer within the required eight weeks.

Meanwhile, the Federation of Small Businesses (FSB) says it is investigating whether bank may be in breach of contract.

"Santander launched this 'free business banking for life' to a big fanfare and as a skilled marketing stunt," says Pierre Williams of the FSB.

"The announcement they have withdrawn these accounts will come as a severe disappointment to the businesses that joined the bank on the strength of this promise."

The terms and conditions of Mr Daniels' account make it clear that they can be varied by the bank with proper warning.

The bank says it is doing just that and will, in due course, issue all its customers with the required 60 days notice of the changes.

Anyone who does not like it will have to close their account and take their business elsewhere.

In Mr Daniels' view he is not being subjected to a variation on his account, but in effect a compulsory transfer to a new one.

Is that fair?

Chris Warner, a lawyer at the consumers' association Which? warned that small businesses do not have the same legal protection as individuals against being taken by surprise by the small print in contracts.

"Businesses are not protected as consumers are against unfair terms in contracts," he explained.

Marc Gander, of the Consumer Action Group, says anyone in Mr Daniels' position should think about going to the County Court to obtain a judgement that Santander has breached its obligation to treat customers fairly, under the Banking Conduct of Business (BCOB) regulations.

"These regulations set a statutory duty on banks to act fairly," Mr Gander says.

"They are hugely powerful but no-one seems interested in using them."

BBC News External Link Show Citation

Latest News

Harvard Citation

BBC News, 2012. Santander's free business banking is no longer forever [Online] (Updated 29th Jul 2012)
Available at: http://www.ukwirednews.com/news/1443354/Santanders-free-business-banking-is-no-longer-forever [Accessed 2nd Sep 2014]

News In Other Categories

  • Former Shelbourne striker Darren Forsyth joins Glenavon

    Glenavon have signed 26-year-old striker Darren Forsyth on a short-term deal until January.
  • Former Stranraer ferry terminal site interest heats up

    Inquiry levels from developers looking at taking over Stranraer's former ferry terminal site have been revealed.
  • Survivor singer Jimi Jamison dies aged 63

    Jimi Jamison, the lead singer for US rock band Survivor, who sang the theme tune for hit TV series Baywatch, has died aged 63.
  • Uber banned in Germany by Frankfurt court

    Car pick-up service Uber has been banned across Germany.
  • Bristol Academy extends reach overseas with first foreign students

    With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com
  • Survivor singer Jimi Jamison dies aged 63

    Jimi Jamison, the lead singer for US rock band Survivor, who sang the theme tune for hit TV series Baywatch, has died aged 63.