Over 200,000 Santander small business customers who have small business accounts with the bank will now have to pay a monthly fee of £7.50, even though their accounts were marketed as “free forever”.
Approximately 230,000 small business customers are affected by the bank’s announcement; it claims that it is “no longer viable” to continue to offer these bank accounts for free.
As part of its defence, Santander says that the £20.7million raised by the charges will help it to provider a better service for the accounts as well as more interest. The bank says that their will be more business managers to speak to in local branches and offer a higher rate of 0.25% on the accounts.
Santander has been letting the account holders know about the changes by letter, stating that they will come in to affect later in the year.
Many people will be upset about the changes which breach the previous promise. They are being encouraged to complain to Santander right away by the Financial Ombudsman Service (FOS) and the Financial Services Authority (FSA).
The Federation of Small Businesses (FSB) has said that it is investigating whether Santander may be in breach of contract over the changes to the accounts.
A Santander spokesman said: ‘Our business customers have told us they require more.
‘The majority of our customers will see that this account is highly competitive and gives them the all-round service they demand so that they can concentrate on growing their businesses.’
Pierre Williams, from the FSB, said that: ‘Santander launched this “free business banking for life” to a big fanfare and as a skilled marketing stunt.’