Santander has reversed its decision to withdraw its promise of “free banking forever” for 230,000 business customers.
The businesses were promised this by Abbey National and Alliance and Leicester when they signed up for their small business bank accounts before the building society’s was taken over by Santander.
Small businesses had been asked at the end of July by Santander to pay £7.50 or £12.50 a month for their business accounts that had previously cost nothing.
Business owners were angry that they would have to pay fees for small enterprises that had very few transactions.
Tony Orchard who runs a small property business near Reading said: “I am a small company with few banking transactions and chose to get free banking for ever because I had no use for the complicated products offered to larger companies.
“I was not interested in getting any interest for the small amount I had in the business account. That was a bonus but it soon disappeared or was reduced to nearly zero.”
Santander had previously said that the free bank accounts were not viable and that in return for the fee customers would receive better service. It said that its market research had showed that customers wanted the accounts because they offered more support for business and facilities.
A spokesperson from Santander explained the change of heart.
"After listening to feedback from our existing customers, a small number of whom do not feel their businesses would benefit from these changes, we will be retaining the fee-free option for existing customers."
However, the bank may have been influenced by the possibility of customers complaining to the Financial Ombudsman Service (FOS). It would have cost the bank £500 in FOS administration fees and if every affected customer had followed this route, the bank could have ended up with a bill totaling more than £100 million.
The marketing brochures that were used to entice customers to run their business accounts with the institutions promised that the accounts would be “free forever”.
A letter will be sent next week to the customers telling them of the change.
The new accounts that customers were to be offered are still available and despite the protest, Santander says that the accounts represent good value for money and remain on offer to customers who want to switch.
The bank said: "Feedback – both from existing customers and non-customers – increasingly told us they wanted more access to local business support; more transparency; more competitive and fixed costs; more interest on their current account and easy access to funding for their businesses."
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