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Comments: (3)

A Finextra member
A Finextra member 10 December, 2014, 12:04Be the first to give this comment the thumbs up 0 likes

From ffrees.co.uk: no Overdraft, so no debt.

To paraphrase, we won't charge you for a service we don't actually offer. How much would you charge if you did?

Alex Letts
Alex Letts - U - Sheffield 10 December, 2014, 12:50Be the first to give this comment the thumbs up 0 likes

Yes fair comment, and something I should have put in the blog. :)

Another way to look at this is that Ffrees charges up to £120 pa for a current account service that banks charge nothing for!

This is because the banks cross subsidise their core service using  a business model built around an expectation that customers will either make a mistake or get into debt. That practice may become illegal but the CMA has yet to pronounce.  It is accepted practice, but not necessary on other models.

So we don't need to offer these debt "services", and our customers, by and large prefer us not to, sensing a self-imposed discipline (30% say they get a Ffrees account because it has no overdraft, and 40% say they left their bank because of "high charges".)

One further comment:  Ffrees is not anti-debt (nor anti bank).  Some customers may have the best intentions to avoid debt but due to circumstances need a loan.  The de-componentised model we work to, means they will shop around rather than fall into the easiest option of borrowing from their current account provider which may not be the best deal they could get.

 

Alex

Alex Letts
Alex Letts - U - Sheffield 15 December, 2014, 12:02Be the first to give this comment the thumbs up 0 likes

....and today's BBA/Treasury announcement means that these charges need to fall by end of 2015, but only only on basic accounts.  This is tough on the banks actually as these accounts are their least profitable/most loss making already.  Wondering if this part of a political deal to clear the decks for the banks to get rid of free-if-in-credit banking before CMA tells them too.