RBS Move on ATMs May Lead to End of Free Banking, Advocates Say
Royal Bank of Scotland Group Plc (RBS), the U.K.’s biggest government-controlled bank, is restricting holders of 1 million basic accounts to its own automatic teller machines, a step that lawmakers and consumer groups say may lead to the end of free ATM use.
RBS will join Lloyds Banking Group Plc (LLOY), which already bars basic-account customers from using other banks’ ATMs.
U.K. banks seeking more profit from retail banking, or at least to cut costs, sometimes face opposition to charges in a country accustomed to free ATMs and other services. In July, the Payments Council, a U.K. industry group that sets payment strategies, reversed a 2009 plan to phase out checks by 2018 following consumer-group and lawmaker protests.
“If the first step is to restrict ATM access, what you’re seeing is a slow squeeze on those elements of banking that aren’t as profitable as others,” said Chris Leslie, a Labour member of Parliament who speaks for the party on financial affairs. “It chips away at the concept of free banking that people have grown used to.”
About 73 percent of adults oppose the ATM restrictions by RBS and Lloyds, with 9 percent in support, according to a YouGov Plc survey commissioned by a rival, Nationwide Building Society. The poll, which included 2,464 adults on Aug. 18-19, identified the banks as “part-owned by the government.”
About 1 million RBS customers will be affected, or less than 10 percent of accounts, said Victoria Bonner, an RBS spokeswoman. The changes will be phased in over the next few months, the bank said. A Lloyds spokeswoman, Siobhan McCluskey, wouldn’t say how many customers hold the no-frills accounts. London-based Lloyds is 41 percent owned by the government.
“Using other-bank ATMs incurs a charge to banks,” Edinburgh-based RBS said in an e-mailed statement. “As we already offer basic accounts at a cost to us, it is not sustainable to offer this feature long-term.”
The basic account holders can still use more than 8,000 RBS, NatWest and Tesco Plc (TSCO) ATMs, plus withdraw cash at Royal Mail counters, the statement said. Basic account holders, often on pensions or government benefits, get cash cards and can arrange direct debits, but don’t have overdrafts or checkbooks.
“It’s another example of banks rowing back on public service,” said Paul Green, a spokesman for Saga Group, a provider of insurance and vacations to people over 50. “RBS, being 83 percent owned by the taxpayers, I should have thought everyone in the country has a stake in this bank.”
First Trust Bank, a Northern Irish unit of Allied Irish Banks Plc (ALBK), also restricts ATM use for basic customers, according to British Bankers’ Association data.
Spokesmen for Banco Santander SA (SAN) and HSBC Holdings Plc (HSBA) said they have no plans to curb ATM use. Both banks limit branch counter withdrawals. HSBC won’t allow them for no-frills customers, and Santander restricts basic account clients to withdrawals of at least 300 pounds ($486) at branch counters.
In the U.S., banks charge an average $1.41 for going outside of their networks, according to Greg McBride, a senior financial analyst at Bankrate.com, a unit of Bankrate Inc. The average surcharge assessed by the bank operating the ATM on non- accountholders is $2.33, McBride said in an e-mail.
Although a third of the U.K.’s ATMs include a charge to use, almost 97 percent of all U.K. ATM transactions incur no fee, according to Link, the country’s ATM network. Banks pay one another 20 pence to 50 pence when customers use machines outside their own network, according to the Payments Council.
“If the banks want to charge three pence, and that’s what it costs them, that’s one thing, but if they want to charge 3 pounds, that’s a different matter,” said Green of Saga.
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