Forget the carrot, first direct is all stick

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www.moneynews.co.uk > Banking > Forget the carrot, first direct is all stick

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Forget the carrot, first direct is all stick

Free banking took a knock today with the announcement by first direct that it is to impose a £10 a month charge on all accounts that do not have £1,500 a month incoming or maintain an average balance of that amount.

The bank has estimated that the move will affect less than 15 per cent of its 1.3 million customers, though a monthly income of £1,500 into the account amounts to a yearly pre tax income of £24,000.

Stuart Glendinning of Moneysupermarket.com has denounced the decision by first direct, describing it as merely a "stick approach" as opposed to a carrot and stick approach as there seems to be no incentives for the customer.

"This will rub customers and prospective customers up the wrong way. It's quite heavy handed and customers can get their own back because if they open a savings account for £1 they can avoid the charges and first direct could end up with all its customers having two unused accounts instead of none. It could turn out to be a bit of an own goal," he continued.

The charges can be bypassed, as Mr Glendinning stated, if a first direct customer purchases another product by the bank such as a mortgage or credit card.

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