01-08-2025
‘We won't take this lying down': Santander customers fight back
When Vince McGarry opened his business bank account in 2010, the brochure boldly claimed: 'Free business banking. Not for 12 months, 18 months or even two years… but forever.'
Now, two decades later, Santander is preparing to charge businesses £120 a year starting October, breaking what many customers believed was a binding guarantee.
It's not the first time the bank has tried to roll back the 'free forever' pledge. In 2011, Santander was forced to abandon similar plans following the threat of a £115m compensation bill.
The decision, announced earlier this month, has unleashed fury among customers who believe Santander is in breach of contract and has broken a clearly marketed consumer guarantee.
The Telegraph understands more than 50,000 business owners could be affected, a deeply unwelcome change after being hit by a string of tax rises this year.
A grassroots campaign has since been set up, with customers telling The Telegraph they have logged formal complaints with the lender, and plan to escalate their grievances to the Financial Ombudsman (FOS) after eight weeks.
The FOS would hear each complaint on an individual basis. Because the FOS could charge Santander up to £650 per complaint, the financial risk to the bank could escalate quickly if thousands of businesses file claims.
Repeated attempts to backtrack
'Free forever' dates back to the early 2000s when Abbey and Alliance & Leicester – two now defunct lenders – introduced the 'free forever' business bank account.
The promotional material at the time was brazen. The Abbey website read: 'Many of our competitors' business bank accounts are only free for a short time, or require a minimum balance. We only charge you for non-standard services or if you exceed our transaction limits. The rest is free. Forever.'
Marketing materials also set out the express conditions by which they would break the 'free forever' promise. '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 brochure seen by this paper read.
The promise appeared in marketing materials, on billboards, online and in the window fronts of bank branches, and continued in 2004 and 2008 after Santander acquired the two lenders, when advertising was rebranded with the Spanish bank's logo.
Santander has remained confident that it has not breached its contract.
The lender previously attempted to break the 'free forever' promise in July 2012 but it quickly ditched the idea after the threat of up to 230,000 customers going to the Ombudsman and leaving it with a £115m bill.
In 2015 it then moved all of the affected business accounts to a 'Business Every Day' account. In the terms and conditions for this product, Santander removed the 'free forever' clause.
The letter sent to customers in January 2015, seen by The Telegraph, read: 'We are simplifying our business current account range and want to make sure that you understand what the changes mean for you. Your new account still has no monthly fee and your monthly transactions will be free as long as you stay within monthly limits.'
The 'what the changes mean for you' section made no mention of the fact that the 'free forever' pledge had been removed or that customers could be liable to pay monthly fees in the future. On a chart explaining the differences between the new accounts, it said there was 'no change' to the monthly account fee of £0.
The following four pages of terms and conditions also failed to mention a loss of the benefit.
'The bank loses whichever way the decision falls'
McGarry, 62, who set up a framing business and art gallery 15 years ago, is a member of the campaign group collecting evidence to present to the FOS.
He said: 'There's a Facebook group that's been set up and there are people on there who have drafted letters for everyone to copy and send in.
'We are all waiting now for Santander to arrive at its final decision [it has eight weeks to settle a complaint] so that we can send it to the Ombudsman.
'In 2012, there were 230,000 of us, we don't know how many there are now and it's likely a lot will have dropped off in the 13 years since, but if there are still 50,000 of us, it could cost the bank up to £32m.'
McGarry said he had been advised that complaints that reach the FOS could take up to eight months to solve but he said that even if Santander won the dispute, it would count for little.
'If we win, the bank will have to pay back all the fees it has collected so far. But if we don't, for £9.99 a month, there are other banks that are cheaper. So even if it does win, it's going to lose all of these accounts; everyone is going to move. They are on a hiding to nothing.'
John Pettman, 80, a retired licenced conveyor, who runs a small business letting garages, said: 'I opened the account in 2005 when Abbey was part of the Santander group. I've heard it said, 'well Santander bailed out Abbey so they should not be responsible for the deals it did'. That is total rubbish.
'Abbey was part of Santander and you can see that in the brochures. In my opinion this is a clear breach of contract. They set out express conditions and you can't arbitrarily change that.
'It's not a massive amount but it's wrong. They are reneging on such an explicit promise, and we aren't going to take this lying down.'
Craig Champion, 49, a software developer from Glasgow, said this move was 'underhanded'. '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,' he said.
'Important information should not be buried'
The Telegraph's legal expert Gary Rycroft said customers could have a strong case if the case was brought to the FOS.
He said: 'Terms and conditions are in effect a contract and a fundamental contract term such as 'free banking forever' cannot be changed by one party unilaterally.
'The 'lapse of time' argument does not hold if the terms and conditions changes in 2015 were not made explicit to the customer i.e. that the customer was not told that these new terms mean Santander are no longer offering free banking.'
There are also concerns that Santander could be in breach of the Consumer Duty. These rules are enforced by the Financial Conduct Authority and mean customers should expect 'timely and clear information' and that 'important information should not be buried in lengthy terms and conditions'.
Lewis Glasson, a partner at Thackray Williams, said that the judgment could go either way. 'The question seems to centre on whether terms and conditions can override a guarantee,' he said. 'The usual answer is no, but the situation we have here is that the bank has migrated existing accounts that were protected by the guarantee into Business Everyday Accounts in 2015.
'I anticipate that Santander will say that the Business Everyday Accounts are a different product. The FOS will be interested in the process behind that migration, including what notice was given to customers, and why the guarantees were seemingly left behind.'
Santander said it wrote to all customers in 2015 informing them of the proposed changes. Customers who do not wish to be moved to the Business Current Account will be allowed to close their account without incurring any additional fees.
