Not upheld: unfair contract terms and account migration complaint against Santander UK Plc

Decision detail

Summary

T, a limited company, complained that Santander unfairly migrated its fee-free business account to a fee-paying account after 18+ years, despite being promised 'free banking forever' when opening the account. Santander argued the marketing promise was never included in contractual terms and conditions, which contained change clauses allowing modifications. The ombudsman found that contractual terms and conditions, not marketing literature, defined legal obligations and that Santander provided adequate notice (60+ days) of the change. The ombudsman noted significant regulatory changes since account opening had increased compliance costs and that free business banking is not a typical offering from major retail banks. The complaint was not upheld, with the ombudsman finding Santander entitled to make commercial decisions about uneconomic products.

The Ombudsman's reasoning

The ombudsman found that while marketing materials promised 'free banking forever', the contractual terms and conditions applicable to the account from inception contained clauses allowing Santander to make changes. These change clauses were consistent across all versions of terms and conditions over 18+ years. Santander provided adequate notice (60+ days) as required by terms and conditions. The ombudsman rejected arguments that marketing literature created binding obligations, noting that contractual terms and conditions are what define legal obligations. The ombudsman acknowledged significant regulatory changes since account opening (anti-money laundering, counter-terrorism financing, fraud prevention) that justified increased costs. The ombudsman found no evidence of loss, as T had not been guaranteed perpetual free banking and would have faced similar situations with any alternative provider. Santander, as a commercial business, is entitled to make decisions about uneconomic products.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website