Financial Services Bill

Again, we have had an useful exchange and I do not want to prolong matters unduly. I have some sympathy for new clause 9, but bank charges have been a bone of contention for far longer than the past couple of years or so. As a former bank manager many years ago, I can remember charging people two guineas—that shows how long ago it was—and sometimes five guineas. There was massive cross-subsidy—there always has been. Some poor soul would pay the five guineas, whereas the debt of someone who had worked their account enormously and had a large potential probate in the executor and trustee company was offset, and he would not be charged in case he took his business somewhere else. There has always been some mysticism about charges—much of it was done by holding a wet finger in the air. When computerisation was introduced, we had all the information about the accounts—the number of cheques, credits and so on—but at the end of the day, the system used to be based on how much we felt we could charge because we wanted to retain the business. I believe that there was far greater competition—genuine competition—then than there is today, and banks genuinely tried to secure new business. I therefore understand the sentiments behind new clause 9, and that back in those good old days—if they ever were good old days—bank accounts were not essential, but something that people wanted. Owning a bank account was not a requirement for living one's life, whereas it is today. People cannot really do anything without a bank account and it has become a much greater necessity for those who perhaps 20 or 30 years ago would not have contemplated having one. They did not need one—perhaps they could go to the post office or even a trustee savings banks or pay in cash. However, today, a bank account is necessary. My fear about the way in which the new clause is drafted is that, as a former banker, I could provide someone with such an account, but it would unfortunately not be accompanied by a cheque book; the holder would not be able to use a cheque card; there would be no arrangements for direct debits or standing orders; it would probably require a minimum credit balance of £100, but the holder would not have to do anything with it. It would yield minimum interest and, although the holder might not be charged for holding it, they might be charged for setting it up. The likelihood of anyone's holding one is therefore nil. We would have to be very detailed and prescriptive about the operation of such a bank account. It would therefore be almost a recipe for price regulation, which one would nail to the wall, and everyone would have to follow it. That would destroy the whole concept of competition. Yet I believe that there needs to be a basic bank account for people with low balances—those who have their wages paid in, and almost all the money goes out again during the month. They need a bank account, otherwise they cannot get paid. We need to find a way in which to implement if not a free account, a low cost account for those people. There has never been free banking—there is no such thing as a free lunch. However, since the Supreme Court decision, my fear is that the concept of people not being charged—which is not quite the same thing as free banking—will diminish and that many more charges will be levied on accounts.