Free banking ‘has two years left’

Defaqto anticipates a “backlash” from banks in response to consumer and regulator pressure to cut charges as Individual Voluntary Arrangements (IVAs) continue to soar in popularity.

“I will be very surprised if free banking is universally available in two years time,” said David Black, head of banking at Defaqto.

“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead,” he continued.

Defaqto also noted that Financial Ombudsman Service is currently estimated to be dealing with in excess of 1,000 bank charges issues each day in the UK.

A recent report from Citizens Advice revealed that in January of this year it had 15 per cent more requests for debt advice than was the case in the same period during 2006.