Bank charges: seeing through the fog

By on March 24th, 2016 in Currency Exchange, Operations

The investigation focuses on transparency of bank charges and service quality – or in layman’s terms –  how much people pay and what they get for their money. Both are areas in dire need of more clarity, across all types of business accounts and other financial services.

This isn’t just about currency exchange — where even ‘no fee’ arrangements conceal fees within the spread. Current accounts, international money transfers and credit cards all attract a bamboozling array of costs.

Even if it were straightforward to switch, it becomes very difficult to compare like-for-like. Decision makers find it difficult to know what represents value for money, with the inevitable and potentially costly consequence of sticking with the status quo.

Transparency isn’t in the interest of the banks, so it makes sense that they will not rush to change things. “Transparency is unprofitable, because as soon as people know the charges they see how to avoid them” says Mark Mullen, the former chief executive of First Direct. He should know.

Perhaps a good thing would be to instigate another investigation into corporate banking — but time is not on the side of anyone but the providers. Even when the consumer/SME review reaches its conclusion in August, it will likely be years before any remedies are enacted.

Business banking customers cannot afford to wait. As we have seen with emerging P2P models, alternative approaches do exist. Technology-enabled companies can countermeasure industry inertia and reticence.

For some transactions we have no choice but to rely on our bank, but it’s important to make sure you don’t pay for things you don’t have to. The accumulated cost of ‘leaving things be’ could well be substantial.


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James is freemarket’s Chief Commercial Officer. He has a history of finding new ways to solve age-old financial challenges and was responsible for launching some of the first online money transfer and prepaid card initiatives in Europe.


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