18-07-2025
Santander hits customers with £120-a-year fee on ‘free forever' accounts
Santander customers face paying £120 a year for business accounts despite previously being told they would be 'free forever'.
Thousands of small business owners will be charged £9.99 from October to continue banking with Santander even though the accounts were heavily marketed as never to incur fees.
The 'free forever' guarantee referred to customers who originally held accounts with Abbey National and Alliance & Leicester. These accounts were transferred over to Santander after the lender took over the banks in 2004 and 2008 respectively.
Marketing brochures wrote in large bold letters that the accounts would be 'free forever', with some stipulating the limited circumstances in which that promise would be broken.
'We guarantee that unless there are any changes to the law or banking regulations, or any new taxes relating to bank charges, you will benefit from free day-to-day business banking forever,' one Abbey National brochure read.
Another advertisement wrote: 'Other lenders might offer you free business banking for 18 to 24 months and then start to charge. With Abbey, day to day business banking is free forever. And at Abbey forever really does mean forever. That can make a huge difference to your business costs.'
Although free accounts were removed from new customers in 2011, an attempt to renege on the 'free forever' promise for all customers a year later led to fierce backlash from customers.
Santander was forced into an about-turn in September 2012, less than two months after announcing customers would have to pay either £7.50 or £12.50 for a business bank account.
There were also concerns at the time that its 230,000 customers could have taken their grievances to the Financial Ombudsman Service (FOS), which could have left the bank with a £115m bill in administrative fees.
Financial businesses are liable to pay case fees of up to £650 to the Ombudsman once they have exceeded three complaints in a year.
The latest changes again raise the risk that the bank could be dragged into numerous disputes with customers who feel they were mis-sold.
A spokesman for the bank said the affected accounts were migrated into its 'Business Every Day' account in 2015, and that the terms and conditions for this contract did not include the 'free forever' clause.
However, some customers argued they were not aware of this change, and that it was not adequately communicated at the time.
Jennifer Iles, a graphic designer, told the Guardian she signed up to service because of the 'free forever' commitment. She said: 'I objected when Santander tried to impose monthly charges in 2012.
'Now they are not only trying to renege again but are denying the obligation. They will have a fight on their hands.'
Another customer, who opened their business account in 2005, told the Guardian: 'Which part of forever do Santander think doesn't apply now, and how can they justify introducing charges given their pledges to the contrary?'
A Santander spokesman said: '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.'
