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March 8, 2010    

Virgin Money to become first bank to charge upfront fees

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by Kay Murchie

Virgin Money, which is set to launch as a retail bank later this year, has announced it will charge a monthly fee for current account customers.

However, the company said the fees will be low and will replace high overdraft charges.

Sir Richard Branson’s Virgin Money recently acquired regional bank Church House Trust.

Virgin Money, which was unsuccessful in acquiring crisis-torn Northern Rock over two years ago, already offers savings, credit card and investment products to around 2.5 million customers.

The launch of Virgin Money comes at a time when consumers have lost confidence in existing High Street banks following the financial crisis and Sir Richard wants to take advantage of this, giving Virgin the opportunity to quickly gain a share of the market.

Currently, there are only four major players in the UK market following Lloyds TSB’s hasty takeover of HBOS. However, the Government hopes that branches being sold off by HBOS and Royal Bank of Scotland will encourage competition.

However, this is all set to change with the launch of Virgin Money, as well as Metro Bank, which has been granted a banking licence by city watchdog, the Financial Services Authority.

Furthermore, supermarket giant Tesco is also set to expand into the banking industry. Tesco Bank already offers credit cards, savings accounts and insurance via its Tesco Personal Finance (TPF) brand and it has announced plans to offer mortgages in the near future.

Returning to Virgin Money, the group’s chief executive, Jayne Gadhia, told the BBC: “We want to live up to Virgin’s ethos of making sure people aren’t ripped off, that they know what they’re paying for with no hidden charges and I think that’s really important.”

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