HSBC UK bank boss encourages debate on free banking - The Guardian

The head of HSBC's UK banking business has called for a debate about how to pay for current accounts following the call by top banking regulator Andrew Bailey to end "free" banking.

Joe Garner, who runs HSBC's high street banking operations in Britain, said the fairest way was to charge for transactions – but this was also the most unpopular. "The cost of operating an account for someone who comes into the branch every few days compared with someone who logs on from time to time is radically different. If there was a monthly charge there is still a cross-subsidy," said Garner.

"The only truly fair way of charging for banking will be transaction-based pricing, ie you pay for exactly what you do," he added. "But customers tell us this is the most unpopular way for paying for the banking. The most popular model is the current one – but that doesn't mean it's the right one."

Bailey's call for "intervention in the public interest" over free banking, which he suspects could encourage mis-selling because of the "unclear picture" over the price of financial products, has attracted attention as he is acting head of the body that is to become the prudential regulation authority. It will be set up in the Bank of England to oversee the industry.

Speaking on the fringes of HSBC's annual meeting, Garner said he could not give "an open commitment on the pricing of any product" when asked if the bank – one of the first to introduce free banking in the 1980s – was committed to maintaining it, but said there needed to be "thoughtful discussion". He made it clear that there were no plans for any changes. Asked the same question, chairman Douglas Flint said the bank was "committed to being competitive".

Flint, who at times had to deflect criticism of board members, the bank's sales practices and pay policies, said banks needed to help facilitate economic recovery. "What is even more critical is that the financial sector does not endanger any recovery through another crisis of its own making," he said.

One private investor, Michael Mason-Mahon, intervened persistently, at one point questioning the integrity of the board – including Flint himself, prompting the senior independent director, Sir Simon Robertson, to intervene to defend him as a "man of the highest integrity". There was applause as Flint was re-elected with a vote of more than 97%.

Chief executive Stuart Gulliver ruled out major acquisitions of the type that the bank has been associated with in the past. He said he expected the eurozone to "hold together" but raised the prospect of a form of "euro Tarp" – the bail-out system used in the US during the 2008 banking crisis – as well as an insurance scheme for savings across Europe.

Dave Uren, from the union Unite, urged the board to listen to representations from workers who, he said, had alerted the bank to the potential payment protection insurance mis-selling scandal, which has so far cost HBSC £800m in provisions.

Shareholder power

HSBC chairman Douglas Flint has said he would consider sounding out private shareholders over executive pay – just as City investors are consulted – but ruled out putting employee representatives on the board. As the remuneration report endured a protest vote by 14% of shareholders, Flint also faced criticism for not providing details of the highest and lowest paid employees. The bank paid chief executive Stuart Gulliver more than £7m last year. Bernadette Fisher from the Unite union said clerical workers took home £17,000. "Is that right … when you are making multimillionaires of a small group of people?" she asked.