Nationwide is to sue Barclays over charges

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THE NATIONWIDE Building Society threatened to sue Barclays Bank yesterday over its plans to charge millions of customers from rival banks a pounds 1 fee for using its 3,200 cash machines.

The threat of legal action by Britain's biggest building society inflamed the row over the growing trend for high street banks to impose charges on the customers of their competitors. The fee to be imposed by Barclays will affect millions of people who use Barclays machines but do not bank with Barclays. It could raise more than pounds 110m a year, rivals said.

Brian Davis, the chief executive of Nationwide whose three million customers could be hit, said: "We are not prepared to stand by and see our members disadvantaged by unfair charges. Nationwide does not charge people for using our machines. We do not penalise our or anyone else's customers."

Nationwide's legal advisers have written to Mike MacManus, the head of Barclays banking products division, warning that it will start legal proceedings if Barclays does not withdraw the charge by Thursday.

Mr Davis maintains that the charge, which will be levied on customers from all other banks except Lloyds-TSB and Bank of Scotland, breaches the rules of Link, the nationwide cash machine network that Barclays joined earlier this year. Barclays has a separate arrangement with those two banks.

Barclays yesterday rejected the Nationwide ultimatum. Peter Duffy, head of screen banking at Barclays, said that the bank was just being upfront about what others were doing by the backdoor. "We are disappointed that other banks seem so resistant to our move which introduces clear charging."

Many insiders suspect Barclays is making a pre-emptive strike against smaller banks, which, it fears, are piggy- backing off its expensive branch network, and cherry picking its best customers, particularly those such as the Royal Bank of Scotland and the Co-op which believe that cash withdrawals should be free.

But rivals said they already paid Barclays 30p every time a customer of another member bank uses its cash machines.

Most banks already charge their own customers for using their cash machines but this is the first time a bank has tried to get other banks' customers to pay for a service which its own customers get free.

David Smith at the Co-op Bank said: "It is a basic banking service. More people use cash machines than going through the branch these days. It should not be an income stream."

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