Daylight robbery at cashpoints

BANKS are introducing fees for cash machines in a series of stealthy moves that have outraged consumer groups. Some High Street banks are ready to charge up to £1.25 a time at machines which were previously free. They are also threatening to axe hundreds of 'hole in the wall' machines - mainly in remote locations - which they claim are making losses.

The decisions mean thousands of customers, particularly in rural areas, will have to travel many miles to find a cashpoint where they do not have to pay to access their money. The controversial moves come against a background of massive profits at the big banks and fly in the face of a promise made less than two years ago not to charge.

Alliance & Leicester has already introduced some 800 new machines, many in rural post offices and petrol stations, which charge £1.25 to customers of other banks. It is also looking at converting a number of machines in its network of 2,000 Automatic Teller Machines. At the same time Abbey National is threatening to shut down 100 loss-making machines, mainly in remote locations.

The shift comes amid clear evidence that new, independent operators are keen to replace these machines with ATMs charging up to £1.50 a time to everyone using them. Industry analysts see this as the thin end of the wedge, with thousands of free machines likely to be replaced by ATMs with fees. To add to customers' problems, the independent operators are installing machines in outlets like restaurants and shops, making them much harder to find than traditional sites in shopping centres and High Streets.

The National Association of Bank Customers angrily condemned the move to shut down ATMs or impose charges. Spokesman Stuart Cliffe said: 'The banks introduced cash machines as a cheaper alternative to branches and counter staff. Now they are threatening even to do away with these. We are looking at losing machines which provide vital cash services in rural and remote areas without charge. Many people will find they have no alternative but to pay a fee.' He added: 'Customers will be horrified. The industry gave the impression that charging had been ruled out, but we seem to be back to the bad old days. There is ample evidence that the banks are making excess charges. But they have shown no shame, and now they appear to have found a new way to make a fast buck.'

The banks, however, claim that customers are willing to pay what they call a 'convenience fee'. Peter Brown of Alliance & Leicester, which made a pre-tax profit of £396m last year, said: 'We are having to look at some machines to see whether they are still viable on a fee-free basis. We may have to bring in charges. The alternative is that, without a fee, these machines would not be viable and we would have to look at withdrawing them. This is a convenience fee. The point we stress is that people have a choice whether they want to use the machine or not. We make it very clear to users.'

The bank said its policy was to have a mix of free and charging machines, but Brown could not put a figure on the number of free machines which will be converted. Alliance & Leicester does not charge its own 1.7m current account holders

Abbey National, which made pre-tax profits of almost £ 2bn last year, said a reduction in the amount it is allowed to charge other banks for dealing with their customers - an average of 24p - has made many machines uneconomic. Andrew Pople, managing director of retail banking, said it was looking at removing 100 of its 1,400 'remote' machines - those not on the bank's own premises. In all, the bank has some 3,000 cashpoints. Pople said: 'We are having to look at limiting or reducing our costs. We are looking at sites which are most marginal and will start reducing over the next year.'

The bank said it would not remove a cashpoint where it was the last one in town, or the only alternative was one which imposed a charge. But Pople admitted: 'Ultimately it will create more opportunities for people to come in on the basis of applying a charge.'

Patrick Fraser, editor of Retail Banking International, warned that other banks are likely to follow. He said: 'I expect hundreds or thousands a year will move away from banks to independent service providers. And the customers will end up paying more. The logic is that Abbey National will take its machines out because it can't make a profit and they will be replaced by independent providers who can charge a fee so they can make a profit,' he told the BBC Radio 4 Today programme.

Already the vast majority of new machines installed each year charge everyone using them. Experts predict almost half the cashpoints throughout the country will be levying charges within the next three years.

Two years ago Barclays led a drive to introduce fees of around £1 a time on ATMs, provoking widespread public anger and a splt within the industry. Barclays, NatWest, HSBC, Lloyds TSB and Abbey National all imposed 'disloyalty charges', but others, including Nationwide, the Co-op Bank and the Royal Bank of Scotland, resisted the tempation to make extra millions from such fees.

Barclays and its supporters were eventually forced to climb down in the face of a fierce and sustained public backlash. After months of customer protests and lobbying by consumer groups, the fees were scrapped in January last year. Now the industry seems to be trying to achieve the same result without alerting the public.