Julian Knight: Weaning us off free banking won't be easy

If Lord Turner's wish to see a charge attached to all current accounts is to be granted, packaged deals will have to improve

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The Independent Online

I have never been a fan of packaged accounts – which bundle together lots of different insurance products with a slightly souped-up current account in return for a monthly fee. They are a way to get us to pay for something which has long been free, namely current account banking while in credit. Some people, I suspect, sign up believing these accounts raise them above the hoipolloi – if that floats your royal barge then bully for you, but for me it's a no thanks.

It seems the Financial Services Authority isn't much of a fan either. This week, it told banks they need to be more careful about how they sell these accounts. Clearly, with the payment protection mis-selling scandal in mind, the FSA wants banks to ensure that when they sell these accounts the adds-on are relevant to the purchaser. In other words, their personal circumstances don't bar them from claiming on the policies.

It's good that the FSA is putting the emphasis, finally, on the seller rather than the buyer. Bankers should not be able to hide behind caveat emptor. But, from the top of the FSA there is a different message. Lord Turner in his apparent attempt to land the Bank of England Governor's job has been saying that free banking should come to an end. This is music to bankers' ears, they really don't like bothering with all this free banking while in credit malarkey.

But what Lord Turner doesn't appreciate, or simply ignores, is that millions of Britons either cannot afford or simply do not want to start paying for their current accounts, even when travel insurance, mobile phone cover or, most bizzarely in the case of M&S Money's account launch, free cups of tea and coffee are thrown into the deal.

I'm afraid if the bankers and Lord Turner want to wean us off free banking they are going to have to do a lot better than the current crop of packaged accounts. I will hold on to my free banking for as long as I can and when my bank decides it doesn't want my business I will switch to an institution which does.

Four years on ...

On the closing day of the last Olympics in Beijing you could have a punt on Lehman Brothers' shares (a safe investment if I ever I saw one), arrange an interest-only or 100 per cent mortgage with little or no proof of income, or reply to one of the stream of marketing bumpf offering you an instant loan or credit card.

Suffice to say, things have changed beyond all recognition in the four years since the dousing of the Beijing flame, and, you know – double recession aside – most of it is actually for the better.

End the energy swindle

British Gas's soaring profits from residential customers is as clear evidence as you need that the energy sector is ripping off consumers.

The regulator Ofgem, which has in the past said it will take companies to task for being too quick to raise bills when wholesale prices move up and then too slow to cut them when the reverse happens, needs to follow up its words with some action. This energy rip-off cannot be allowed to continue.

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