New ATM Charges for RBS Customers

RBS has recently announced its decision to start charging basic account holders each time they withdraw cash from a rival bank’s ATM.  Lloyds has already been doing this for a number of years.

Basic accounts are just that: basic.  They usually don’t provide overdraft facilities or even a cheque book.  They tend to be used by low-paid workers, who previously would have been paid in cash, but have been forced to open a bank account purely to be able to receive a salary at all.

Let’s face it, starting to charge for what was previously a free service is never going to be a popular move, but excluding some of the poorest members of society form the UK’s free cash point network seems deeply unfair.

What the Banks say

Lloyds and RSB argue that they are merely covering their costs, which  is the responsible thing to do for their share-holders, especially now they are largely government-owned.

RBS is 83% state-owned; Lloyds is 43% state-owned.

Banks are not charities. Banking is a service like any other.  You have to pay for water, gas and electricity, why not for banking?  Basic accounts are not a profitable part of their business, in fact they are losing money on this service.

The UK is the only country in the world to provide a free network of cash point machines.

What the Protesters say

This has whipped up a storm of protest from customers using the basic account service.

Many would gladly give up using the banks altogether if they could, but in the 21^st century that is no longer an option for most people.

In order to get the cheapest rate for utilities such as electricity and gas you need to set up Direct Debit payments.  These days most employers pay salaries into their employees’ bank accounts as a matter of course.

For the unemployed, state benefits are now also paid into bank accounts. To live without a bank account is to be socially marginalised.  Effectively we are all forced into using the banking system whether we want to or not. Why should we have to pay just to access our own money?

If rival bank ATM transactions incur operating charges, surely it works both ways. Lloyds and RBS also charge when their ATMs are used by the customers of other banks, so aren't they are already clawing the cost back, without needing to resort to charging their customers?

Thin End of the Wedge
MPs have responded to RBS’s move by asking them and the Lloyds Group to justify the charges. Treasury select committee chairman Andrew Tyrie wrote to the banks, “We are concerned about the restrictions Lloyds and RBS are placing on basic account holders’ access to other banks’ cash machines. This change threatens to leave many basic account holders at the two banks unable to access the majority of cash machines in the UK".

Will other banks follow suit and start charging basic account holders for ATM services?

Will this move signal the end of free ATM use for everyone in the UK, regardless of the type of bank account they use? This could be the thin end of the wedge...