Bank account market could change

20/11/2009

Market competition in the current accounts market is on the increase, potentially benefiting Brits looking for solutions to their debt problems.

Santander, owner of high street firms Abbey and Alliance & Leicester, has unveiled its Zero Current Account, which will not charge fees for customers who bounce cheques or do not pay direct debits.

However, the deal will only be available to the firm's existing or future mortgage customers.

The move could be a signal of further, similar, product launches in the future.

A verdict for the test case on the fairness of bank penalty charges is to be given by the Supreme Court next week.

If it finds against the banks, customers could be able to reclaim billions of pounds in previous fees.

Pierre Williams, of personal finance website MoneyExpert.com, said: "Santander is turning up the pressure in the current account market and this could be the shape of things to come in banking.

"What really stands out is the absence of charges on payments that bounce."

Kevin Still, EuroDebt director, added: "The fact that it is only available to existing or future mortgage customers seems to reflect another ‘hand cuff’ that may have adverse consequences where there are financial difficulties. The bank wants to see your salary coming through the bank account and protect itself in the situation of mortgage arrears. There have been a large number of complaints regarding banks using the right of ‘offset’ to pay off other commitments within the banking group ahead of other priority payments.

"EuroDebt's approach has been to offer a pre-paid current account with a low flat fee of £12.50 with no charges for bounced direct debits or standing orders with no pre-conditions. The facility is available to people on a Debt Management Plan, an IVA or subject to a bankruptcy Order."

The Zero account is to be launched next year.

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle, Recent Graduate Debt,

Regional Debt Advice; Debt Advice Leicester,

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