Banks plan new pounds 1 cash machine fee

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HIGH STREET banks are preparing to hit millions of their customers with extra charges of up to pounds 1.50 each time they use cash machines which have been free of charge for years.

In a move that drew immediate criticism from consumer groups, Midland Bank, now rebranded HSBC, and Abbey National, are set to impose extra charges of pounds 1 and pounds 1.50 respectively on withdrawals of as little as pounds 10.

In a letter to its 4.5 million current account customers, Midland said it would charge pounds 1 each time they withdrew money from Abbey National, Halifax, TSB and Royal Bank of Scotland machines.

The letter presents the move as good news - part of Midland's decision to join Link, the cash machine network of former and current building societies. Midland customers, the letter says, will now be able to use 25,000 cash machines.

But consumer groups attacked Midland for failing to mention that many of these machines had been available before the link-up. The pounds 1 charge will apply to 7,000 cash machines which were previously free to Midland customers. Only 5,000 - NatWest, Clydesdale and Ulster Bank - will remain free of charge.

"It is odd and a bit sneaky that they haven't pointed out that their customers got them for free before and are now getting charged," said Neil Walking of Which?, the Consumers' Association magazine.

From 12July, Abbey National will charge customers pounds 1.50 each time they use any machine except their own or Midland's. Only 5,000 machines will be free, compared to 11,000 previously. The move underlines a growing trend away from free retail banking. Yesterday NatWest said it would charge its customers pounds 10 a month to see a personal bank manager. Last week, Abbey National said it would charge pounds 5 each time a customer paid a bill over the counter.

Midland's decision is also in stark contrast to the policy of Royal Bank of Scotland, which recently won plaudits for offering its customers free withdrawals from any cash machine in the country. Harry Hay, head of RBS's cash network, said of their rivals' decision: "This is certainly not an initiative that customers would wish for."

The average high street bank conducts upwards of 500,000 cash machine withdrawals a day, averaging pounds 50 each. By imposing new charges, Midland and Abbey National will extract extra charges running to tens of millions of pounds a year.

Midland Bank and Abbey National both say they are simply passing on charges levied on them when their customers use another bank's machines.

"It is not a decision we take lightly," said Richard Spence of the Midland Bank.