230,000 Santander business customers with free current accounts will soon be hit with a monthly charge, despite the fact some customers were sold the account as being 'free forever'.
The Spanish banking giant stopped selling its free business banking account in October last year, but all customers with the account will be moved onto a new fee-paying offering later this year.
- Santander to charge customers with free business banking
- Majority will pay £7.50 per month
- Changes will come into force later in the year
It's a blow for many customers who believed they had taken out accounts which would be free indefinitely.
Abbey, which Santander bought in 2004, marketed its account as being 'free banking forever', while Alliance & Leicester (A&L), which Santander bought in 2008, marketed its account as being free 'forever'.
Santander marketed its business banking account as being 'free forever' until it dropped the phrase at the end of 2010.
Many MoneySavingExpert.com users have contacted us up in arms about the price changes. Forum user Paulgonnabedebtfree says: "If it wasn't meant to be "free forever", it should have just been called "free"."
Santander confirms that affected customers won't have any choice to not pay the new fees.
Who is affected?
230,000 Santander business banking customers with turnovers of less than £1 million, who took out an account before the product was withdrawn in 2011, will be affected by the change. This will include those who signed up to a free business banking account under either Abbey or A&L.
Anyone who signed up for a business banking account with Santander after October 2011 will already be on Santander's new fee-paying account.
Those with charity bank accounts will not be affected by the change and will remain on the free product.
How much will I have to pay?
The amount you have to pay depends on how much cash you credit into the account each month. The more you pay in each month, the more your monthly fee will be.
However, the tariff you sign up with will remain the same every month. Santander says if customers find they are exceeding the monthly cash deposit limit, they can contact it to discuss changing tariff.
The new account tariffs are £7.50/month, £12.50/month, £20/month and £40/month.
Santander stresses that 95% of customers will be moved to the £7.50 a month tariff.
When is this happening?
Santander says there's no exact date yet for when customers will be transferred onto the new fee paying-account, although the change will happen later this year.
It has notified customers by letter that the changes will be taking place and it says it will write to customers again 60 days before the change takes place to let customers know when it's happening.
What if I'm unhappy with paying the fee?
Santander says there is no option to remain on the free product, so if you're unhappy about having to pay a fee the only option is to compare what you have with other accounts on the market and switch to another provider if you find a better offering.
However, if you believe you were sold a free banking account for life you could have a strong case to argue your point with Santander. First, make a complaint to the provider. If you get nowhere, take your complaint to the independent Financial Ombudsman Service.
What does Santander say?
A spokeswoman for Santander says: "Our business customers have told us they require more – more access to local business support; more transparency; more competitive, fixed costs; more interest on their current account and easy access to funding for their businesses.
"We have listened and we have built our new offering around this. The majority of our customers will see that this account is highly competitive and gives them the all-round service they demand so that they can concentrate on growing their businesses."