Watchdog green lights end of free banking – but banks risk a customer revolt: JEFF PRESTRIDGE

It is sometimes difficult to determine what purpose the Financial Conduct Authority (the country’s municipal regulator) is for consumers.

It’s a conundrum I’m sure many consumers will be wondering today, after Nikhil Rathi, the regulator’s chief, gave the green light to big banks to phase out credit-free banking in favor of fee-charging current accounts.

A “forward” light that, when the banks act (and not if) will make the blood of millions of working people boil with bubbles of financial rage.

As for the banks, I’m sure their bosses are already rejoicing. Even more profits to keep the City happy – and even more directors’ bonuses that would keep us mere mortals financially secure for many lifetimes.

Surely the regulator should understand that free banking for those who keep their accounts in good order is woven into the financial fabric of this country, like old fish and chips or bangers and mash.

It is a reward for saving and should not be abandoned.

Most people, especially older people, simply won’t accept the idea. A financial uprising? Don’t rule it out.

For example, we had one 25 years ago when some of the big banks wanted to charge non-customers to use their ATMs.

Consumers won that battle, and I’m sure they would put up an almighty fight for the loss of credit-free banking.

Customer revolt: Banks have faced backlash before when they try to charge for what was previously free, and ending free banking would spark fury, says Jeff Prestridge.

It should come as no surprise that Mr Rathi said the FCA would not stand in the way of those banks that wanted to rule out credit-free banking. It’s a “commercial and market decision, not a regulatory requirement,” he added.

After all, this is the timid regulator who stood by for years while banks gouged their savers out of paltry returns while the Bank of England aggressively raised interest rates in 2022 and 2023.

It was only the anger of the Treasury Committee, chaired by the formidable Conservative MP Harriett Baldwin, that prompted banks to start rewarding savers with slightly higher interest rates.

And while the FCA has just taken on the responsibility of ensuring access to cash across the country, it has barely covered itself in glory so far.

Banks continue to cut their branch networks with impunity, with Lloyds confirming 53 imminent branch closures across its three retail brands this week.

Next Wednesday, the Treasury committee will question the bosses of Barclays, Lloyds, NatWest and Santander over whether they are giving customers a fair deal, against the backdrop of a persistent cost of living crisis.

I trust that Mrs Baldwin will take the opportunity to question them as to whether they intend to abandon free banking for those who remain on credit. Maybe she should also ask Mr. Rathi to accompany her.