Banks snub Government by voting to charge £2.50 for use of cash machines

The high street banks put themselves on a collision course with the Government and consumer groups on Tuesday by voting to go ahead with controversial cash-machine charges.

The high street banks put themselves on a collision course with the Government and consumer groups on Tuesday by voting to go ahead with controversial cash-machine charges.

The decision by the members of Link, the national ATM (automatic teller machine) network, could see customers charged up to £2.50 a time to withdraw cash from 1 January 2001. The move is a clear snub to Don Cruickshank, the head of the Government's review into the banking sector, who warned the banks last week that he would insist charges should be limited to 30p.

Although the banks stopped short of agreeing the level of charges, Brian Davis, the chief executive of Nationwide Building Society, which has championed the cause of free banking, warned it could lead to some customers being charged £2.50 for withdrawing as little as £10.

The Consumers' Association attacked the Link move as an attempt by the big high street banks to drive out smaller, more efficient rivals. Neil Walking, a researcher for the association, said: "As well as giving them the chance to make more profit from charges, this allows them to prevent rival banks offering free access to their cash machines by setting charges well above the true cost of providing the service."

The outcome of the Link meeting is a victory for Barclays Bank, which sought last autumn to impose a £1 charge on customers from rival banks using its ATMs, only to be forced to back down after the Nationwide threatened to sue.