The Treasury Select Committee will examine the issue alongside an inquiry into competition in the UK banking sector.
A third inquiry into private equity funds will also be held, amid concern over asset-stripping and anti-labour practices.
Yet the scrutiny into 'free' banking will be more eagerly watched by consumers, in light of claims the UK’S USP of not charging for current accounts could soon be lost.
Concern for high-street bankers started in November, when First Direct said it would combat the cost of 40,000 dormant current accounts by charging each customer £10.
Since February 1, thousands of current account holders have paid the fee, causing analysts to speculate that other main providers may now be brave enough to follow suit.
Citibank is to move 150,000 customers from a free account to one charging £10 a month, while Nationwide’s incoming chief executive has said fees are fair on current accounts.
Barclays appears to be at odds with its rivals, given remarks from chief executive John Varley that the bank is “determined” to protect ‘free’ banking.
But as fees are increasingly tolerated by customers, especially on so-called 'added value' accounts, the availability of ‘free’ banking in the future is less than certain.
David Black, head of banking at financial analyst Defaqto, said: “I will be very surprised if free banking is universally available in two years time. “
He believes basic accounts for lower-income earners will remain, but a wavering of services like overdraft free facilities may render them unsuitable for the majority.
“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead,” Black added.
“I would then expect to see a significant increase in account switching as well as many people closing their secondary accounts.”
Mar 12, 2007
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