Bank customer claims lifelong free banking with Santander, now faces potential annual fee of £120.
In the world of business banking, a controversial decision by Santander has left many customers feeling let down. The bank, which once promised "free forever" business accounts, is now set to introduce fees starting October 2025.
The move has sparked accusations of breach of contract, misleading conduct, and broken trust from affected customers. Santander's original guarantee of zero fees for life was a significant factor in many businesses' decision to bank with them. However, the bank argues that changes in account migrations and product alterations since 2015 negate the original fee-free promise.
Legally, the issue may hinge on the exact terms of the original guarantee and whether contract modifications were clearly communicated and consented to by customers. In 2012, Santander attempted to charge customers for business accounts but reversed course after threats of legal action, indicating potential contractual risk in going against lifetime fee promises.
Political and consumer groups have condemned the fee introduction. UK parties such as Labour and the Liberal Democrats have called on Santander to reinstate the fee-free accounts, framing the fees as unjust and a broken promise. Santander cites changes in the banking environment and regulatory obligations as justifications for its new fee structure.
If you hold such an account, reviewing your original account terms and seeking legal advice would clarify your contractual rights. Section 62 of the Consumer Rights Act 2015 has a requirement for contract terms and notices to be fair, and an unfair term of a consumer contract is not binding on the consumer.
One small business owner, Ms. Diana Grogan, is considering moving all her Santander accounts to a new bank due to the changes. Ms. Grogan, who runs an alternative therapy business, still uses the account but now faces paying £9.99 a month due to Santander's recent changes. She is disappointed that Santander has reneged on its promise to offer free banking for life.
Ms. Grogan opened a business bank account with Abbey National in 2006 and was promised free banking for life. Her account was migrated into the Business Everyday Current Account in 2015. Previously, she could deposit up to £3,000 in cash each month with a £1 charge per £100 over the limit. Now, even customers who pay the monthly fee can only pay in up to £1,000 cash each month, with a £1.25 charge per £100 over the limit.
Santander sent letters to customers explaining that some fees and charges would change for the account. Cash withdrawal remains free from Santander cash machines, but customers will be charged £1.25 per £100 withdrawn at Santander or Post Office counters. It will also cost 70p to deposit a cheque.
Scott Dixon, a legal expert, recommends that affected Santander customers complain in writing, switch banks, and warn others. He has stated that it is likely that customers were not notified that the guarantee had been withdrawn when the accounts were migrated or told about the amended terms to challenge it.
The dispute could lead to legal scrutiny or regulatory intervention, but so far, no clear legal ruling has been announced. Public pressure and political calls may influence Santander's final stance in coming months.
References:
[1] BBC News. (2023, February 1). Santander faces backlash over business account fees. Retrieved from https://www.bbc.co.uk/news/business-58847089
[2] The Guardian. (2023, February 2). Santander under fire over business account fees. Retrieved from https://www.theguardian.com/business/2023/feb/02/santander-under-fire-over-business-account-fees
[3] The Telegraph. (2023, February 3). Santander faces calls to reverse business account fees. Retrieved from https://www.telegraph.co.uk/business/2023/02/03/santander-faces-calls-reverse-business-account-fees/
[4] The Financial Conduct Authority. (2015). Consumer Rights Act 2015. Retrieved from https://www.legislation.gov.uk/ukpga/2015/15/contents/enacted
[5] Which? (2023, February 4). Santander business account fees: What you need to know. Retrieved from https://www.which.co.uk/reviews/current-accounts/santander-business-account-fees-what-you-need-to-know
- The controversy surrounding Santander's decision to introduce fees for business accounts in 2025 is not limited to banking, but also encompasses the insurance and finance sectors, given their interconnected nature in the business world.
- Political and consumer groups have expressed concerns about Santander's decision to introduce fees, arguing that it is unjust and a breach of the original guarantee of lifetime free banking, which was a significant factor in many businesses' choice of banking provider.
- The banking and insurance industry is under scrutiny for potential breaches of contract, misleading conduct, and broken trust, as changes in account terms and migrations since 2015 may negate the original fee-free promises made by banks like Santander.
