Santander Faces Backlash Over Planned Fee for 'Free Forever' Business Accounts

Labour and the Liberal Democrats have called on Santander to reinstate its "free forever" business accounts, which the bank announced would incur £120 annual fees from October. The "free forever" accounts were first launched by Abbey National and Alliance & Leicester in the early 2000s and continued after the lenders were acquired by Santander. Santander believes it can now charge fees after moving affected accounts to new contracts in 2015.

In a recent move that has sparked significant backlash, Santander has announced new fee structures for its business accounts, including a £120 annual fee for previously "free forever" accounts. This decision comes amidst growing political pressure from both Labour and the Liberal Democrats to reinstate the free accounts.

The changes, effective from October 1, 2025, will impact various types of business accounts, including the 1|2|3 Business Current Accounts, Business Everyday Current Accounts, and Business Current Accounts. These accounts, which were once free, will now incur a monthly fee of £9.99, a significant departure from their previous free status.

Santander's decision to introduce these fees is part of a broader shift in the banking landscape. The bank cited changing regulatory obligations and the need to meet evolving customer expectations as reasons for the changes. However, this move has drawn criticism from both customers and political parties, who argue that the fees are unjustified and a breach of the bank's earlier promises.

The political response has been swift. Both Labour and the Liberal Democrats have called on Santander to reconsider its decision, emphasizing the importance of maintaining affordable banking services for small businesses and self-employed individuals. Labour MP Rachel Reeves, for instance, has stated that the fees "undermine the very fabric of our economy by making it harder for small businesses to access affordable banking services."

Santander has defended its decision, stating that the new fees are necessary to sustainably develop and meet customer expectations. The bank has also highlighted that the changes will not affect all customers, with registered charities and certain other organizations exempt from the fee. However, this exemption has done little to quell the criticism.

The changes come at a time when the banking sector is undergoing significant transformations. Other banks, such as NatWest, are also making changes to their fee structures, with increases in cash payment fees and cheque transaction fees. This trend underscores the ongoing evolution of the banking landscape, driven by regulatory changes and the need to balance profitability with customer service.

In Chile, Santander's performance has been robust, with Banco Santander Chile reporting a return on equity (ROAE) of 24.5% for the second quarter of 2025. The bank's net income attributable to shareholders increased by 62.8% year-over-year, driven by strong net interest and readjustment income. Despite a slight decrease in net income from the previous quarter, the bank's performance remains strong, indicating its resilience and strategic direction [2].

References:
[1] https://www.thesun.co.uk/money/36098754/santander-new-account-fee/
[2] https://www.ainvest.com/news/banco-santander-chile-q2-net-income-62-8-yoy-550-bln-2507/