Branson Changes Mind Over Bank Fees After Takeover of Northern Rock

billionaire Richard Branson took over Northern Rock plc earlier this month. Following the takeover, Branson’s holding company Virgin Money will be responsible for the 75 branches and 21,000 staff that currently work for Northern Rock.

Many investors have praised the takeover, arguing that it was the only hope that the bank had to avoid a complete banking collapse. However, customers of Northern Rock were not as optimistic about the deal.

Branson announced that he intended to impose an annual £60 fee on all existing bank accounts. This approach is likely to create a lot of controversies and be met with hostility by existing bank customers.

Therefore, Branson has decided that it would be unwise to proceed with only offering fee-charging accounts and decided to take a different approach. Instead of charging fees on all accounts, Branson intends to offer customers the choice between opting for free accounts or accounts that charge fees in exchange for incentives. Incentives include opportunities to earn discounts on gym membership or trips through Virgin Flights.

Although the new proposal is being met with less criticism, many consumer groups are still skeptical of Branson’s new solution. These groups argue that these deals tend to be of low value and are likely not worth as much as the customers would be paying each month. Nonetheless, it is encouraging for many people to see that Branson is at least working on a new system that would help eliminate mandatory fees for Northern Rock customers.

Eddy Weatherill, of the Independent Banking Advisory Service, states that customers are becoming increasingly concerned over the fees being implemented by banks throughout the UK. Weatherill even went so far as to say that no one trusts banks anymore and that bankers are going to need to implement much more equitable programs if they intend to regain that trust.

Many consumer advocacy groups praised reporters who brought the situation to their attention and put pressure on Virgin Money to withdraw the fees. They were afraid that if they failed to get Branson to back off of the fees, other bankers would revoke free accounts as well.

The new announcement directly contrasted statements made by Virgin Money at the beginning of the year. Branson’s employees argued that the fees were fairer and more transparent than those issued by a number of other banks, which were often issued with more secrecy.

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