Labour demands Santander reinstate ‘free forever' customer accounts
Gareth Thomas, the minister for small businesses, weighed into the row after The Telegraph reported Santander was breaking the 'free forever' pledge it used to win customers two decades ago.
The Liberal Democrats also slapped down the Spanish bank, saying it should 'stick to its word' after it had made such a 'bold promise' to customers.
'Free forever' business accounts were first launched by Abbey National and Alliance & Leicester in the early 2000s. They continued to be offered after the lenders were taken over by Santander.
One brochure, which carried both the Santander logo and Abbey branding, read: 'Free day to day business banking – not for 12 months, 18 months or even two years, but forever.'
Another boasted that it was 'no wonder more than 1,000 businesses a week are opening business bank accounts with us'.
However, Santander wrote to affected customers last month to announce they would be charged £9.99 from October. The Telegraph understands the change could affect more than 50,000 small business owners.
Mr Thomas wrote a letter to the chief executive of Santander UK, Mike Regnier. In the letter, Mr Thomas said: 'I was dismayed to read reports that you plan to charge fees to some of your most loyal small business customers, who joined Santander from Abbey National and Alliance and Leicester over a decade ago having opened business bank accounts based on the promise that their day-to-day business banking would be 'free forever'.
'I appreciate that times have changed, and this is not an offer you could make to new small business customers today. Nonetheless it was made at the time and has been honoured ever since.
'I would urge you to reflect on whether this is the right moment for Santander to seek to impose this change unilaterally on its customers, given the reputational impact.'
The bank previously tried to introduce fees in 2012, but was quickly forced to climb down following the threat of a £115m compensation bill if all of its customers had taken their case to the Financial Ombudsman.
Santander believes it is now able to charge fees – unlike in 2012 – after it moved all affected accounts to 'business every day' accounts in 2015.
In the terms and conditions of this new contract, there was no mention of the 'free forever' guarantee. However, the letter sent to customers announcing the switch equally did not mention that customers were losing the commitment.
A section marked 'what the changes mean for you' did not tell customers that it had removed the 'free forever' promise, and a chart explaining the differences between the new accounts said there was 'no change' to the monthly fee of £0.
'These are some of the bank's most loyal customers'
Mr Thomas, who has asked to meet Mr Regnier to discuss the change, told The Telegraph: 'It's concerning to hear that Santander is considering changes to their 'free forever' guarantee for existing business customers, and I have written to urge them to consider their decision.
'These are some of the bank's most loyal customers, who chose their banking provider over a decade ago based on this pledge.'
Daisy Cooper MP, the Liberal Democrat Treasury spokesman, said: 'Small businesses are understandably angry at being charged hundreds of pounds for a service marketed to them as 'free forever'.
'The nasty shock of unexpected fees is the last thing small businesses need after enduring the Government's unfair National Insurance hike and years of chaos under the last Conservative government.
'When big banks make such bold promises, customers rightly expect them to stick to their word.'
Angry customers said the 2015 change was 'underhanded'. Craig Champion, 49, a software developer from Glasgow, said: 'Nobody picked up on this change in 2015. If we thought they were taking it away we would all have kicked up again like we did in 2012.'
A spokesman for Santander previously told The Telegraph: 'The business banking landscape has changed significantly over the last decade.
'As such, we are simplifying our business banking offering as the first step to ensure that we can sustainably and efficiently evolve to better meet the needs of our business customers in the future.'
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