David Prosser: The real villains behind those ATM charges are the banks

John Mcfall, the Treasury Select Committee chairman, has every right to be proud of his reputation as a consumer champion.

John Mcfall, the Treasury Select Committee chairman, has every right to be proud of his reputation as a consumer champion. But his attack this week on operators of fee-charging cash machines was wide of the mark - the real villains are many of Britain's biggest banks, despite their insistence that they have no plans to introduce charges of their own. The committee pointed out that 37 per cent of automatic teller machines (ATMs) now charge for withdrawals - usually £1 or £1.50.

But the growth of fee-charging machines has mostly not been at the expense of free ATMs. In the past four years, independent operators such as Cardpoint, Moneybox and Bank Machine, have installed new machines in locations such as garages, small shops and post offices.

This network of convenience machines has made it easier for people to get their hands on cash. And since this is the firms' main business - they don't offer withdrawals as part of a wider banking service - there is nothing wrong with them charging a fee. In many locations, cash machines would not be economically viable without charges.

So, back to the big banks, which continue to crow about their network of thousands of free cash machines. What bank bosses are less vocal about is the underhand way in which many of them are making money from ATM fees.

Last year, the Halifax Bank of Scotland (HBOS) group, sold more than 800 of its cash machines to an independent operator. This company is now free to introduce fees on the machines. HBOS won't directly benefit if charges are introduced - and it will be able to continue saying its own machines are free - but it made £75m from the sale of the network. HBOS is not alone. Abbey has also sold part of its cash-machine network. NatWest has even bought one of the fee-charging ATM operators, whose profits will now feed into the banking giant's bottom line.

Meanwhile, several banks are making it tougher for customers to avoid fee-charging cash machines. For some time, the Post Office has offered free withdrawals to customers of banks that allow it to do so. The withdrawals must be made over post office counters, so the service is only available during working hours. Still, since 95 per cent of Britons live within a mile of a branch, this is an excellent initiative. Unfortunately, banks including HSBC, Royal Bank of Scotland, which owns NatWest, and HBOS have so far refused to join the scheme.

In other words, while the banks are publicly sticking to a deal agreed four years ago not to introduce fees, many are still finding a way to make money from ATMs. This is not to say there are no problems at all with fee-charging machines run by independent operators. Consumer group Which? says one in four people do not realise they will be charged for using a convenience machine.

That is far too high a figure, particularly since fee-charging ATMs are now often the only way for people to get their hands on cash in socially excluded areas. Residents of these areas, invariably those who can least afford to pay fees, need better guidance on which ATMs charge.

At the moment, there is no standard warning about charges on convenience machines. Some carry stickers, while others use on-screen messages. Getting operators to sign up to a standardised system would be an important advance.

* The Institute of Fiscal Studies says household incomes fell last year for the first time since the early Nineties. But one group of society is better off than ever: children have earned average pocket money rises of four times the rate of inflation over the past 12 months.

Halifax Bank says the average child now gets £8.37 a week, up 7 per cent on a year ago. The figure masks some notable regional variations: Welsh kids get an average of £13.51 a week, the bank says, while across the Severn estuary, children living in the South-west are on just £4.87.

Either way though, it's a serious load of gobstoppers. Some of the money would be better spent on long-term savings. The Government's Child Trust Fund for children born since September 2002 begins on Wednesday and there are lots of other savings plans available for kids of all ages. It's time to start using them.

Don't fall prey to the latest Isas sales push

With the end of the tax year just three days away, City fund managers have gone into overdrive in their efforts to sell individual savings accounts (ISAs).

Most have set up telephone hotlines and collection centres to enable investors to open ISAs right up until midnight on Tuesday.

But this annual drive to encourage people to invest simply to get a tax break is unhealthy.

Remember, ISAs are not investments in their own right - rather, they are shelters within which you may hold a range of assets to protect them from tax.

In fact, investing a few days before the end of each tax year is likely to produce poor results compared to making regular payments into the savings schemes most fund managers now offer, in or out of an ISA.

But the fundamental problem with ISAs is that they distract people. Savers get hung up on using their £7,000 tax-free allowance each year, rather than focusing on their portfolios as a whole.

Too many people buy the latest fashionable investment fund each year, rather than building a well-diversified spread of assets designed with their own specific financial objectives in mind.

If investing in a stock market fund, say, is the right move for you, doing so within a tax-free ISA has real merit.

But you can only make that decision in the context of all the other investments you have already made, your attitude to risk and your short and long-term savings goals.


Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Business Analyst Consultant (Financial Services)

    £60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

    £60000 per annum: Harrington Starr: A leading provider in investment managemen...

    AVS, JVS Openlink Endur Developer

    £600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

    Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

    £30000 per annum: Harrington Starr: A global leader in trading platforms and e...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice