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Future of free banking under threat

Future of free banking under threat

Category: Banking

Updated: 25/07/2012
First Published: 25/07/2012

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The chairman of the Financial Services Authority (FSA) has called for an end to free banking, saying it represented a 'flawed system'.

Speaking in London, Lord Turner said that the regulator wanted an end to the practice in the UK, one of a small number of nations who operate free banking.

Lord Turner, "We need to recognise a central problem in UK retail banking, the impact on competition of free-if-in-credit banking.

"One important barrier to competitive entry into UK personal sector banking is obvious, the fact that the core product, the current account, is usually given away for free, sold at below cost of production.

"It is not a sound basis for a long-term trust-based relationship between a competitive banking system and its customers."

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