New Fee-Free Current Accounts Launched

A new fee-free banking current account structure that guarantees "clarity" has been revealed by the Treasury.

The scheme has been agreed to help people who may have marks on their credit history or who are currently ineligible for accounts.

Details of the landmark deal were first revealed by Sky News City Editor Mark Kleinman.

Expected to be launched within a year, the system will stop banks charging fees for failed direct debits and standing orders.

Under the current system, fees charged by the banks have pushed some holders into unauthorised overdrafts.

Some people have struggled to get debit cards and have been granted only limited access to the cash machine network.

The Treasury reached the agreement with Barclays, the Co-operative Bank, HSBC, Lloyds Banking Group - which owns Halifax and Bank of Scotland - Clydesdale and Yorkshire banks and Nationwide.

The Royal Bank of Scotland Group, including NatWest and Ulster Bank, along with Santander and TSB have also signed up to the deal.

Sky News previously revealed that some banks had expressed concerns during negotiations with the Government about the terms of the deal.

The provision of basic bank accounts, of which there are estimated to be more than 9 million in the UK, is estimated to cost the industry more than £300m annually, with the new accounts likely to add substantially to that bill.

Earlier this year, a European Union directive ordered member states to supervise the introduction of basic accounts which must charge fees described as "fair".

Treasury economic secretary Andrea Leadsom said the new system will allow people to manage money with "certainty and clarity".

She added: "It will end people being effectively locked out of their basic bank accounts due to high fees and charges when their payments failed.

"Ending this unfair situation is a real step forward for the banking industry's most vulnerable customers and improving access to banking is a key part of our long-term economic plan."

The new scheme will also allow non-traditional account providers to enter the market.

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