END OF FREE ATMs

Local councils have decided that hole-in-the-wall ATMs constitutes "business premises" and are sending tax bills to thousands of cash machines. Britain's five biggest banks, Barclays, Lloyds TSB, Abbey, HSBC and Royal Bank of Scotland, which also owns NatWest, confirmed that thousands of their machines were being hit by council tax bills, even though the machines had little need of council services. Banks say the tax bills are levied on most of 6,600 "standalone" cash machines in shopping centres, railway stations and high streets. The bills average £2,000 to £3,000 a year which NatWest said represented a significant cost. (Source: Daily Telegraph, Jun/06)

Banks are accused of dismantling the nationwide network of free cash machines. MPs and analysts have warned that most machines could be charging customers a fee to access their own money by 2005. The banks, generating record profits approaching £30bn in 2004, were said to be greedily conniving in a stealthy invasion of charge machines. Free ATMs are being ripped out at places such as motorway service stations, garages and shopping malls, clearing the way for machines to be installed by firms which charge anything from £1.25 to £5 for a withdrawal.

Hundreds more of the banks' free machines are being sold in multimillion deals to firms which are expected to introduce charges and the banks are moving to profit from the changes by buying up firms whose machines impose fees. Angry community leaders say the development is a major betrayal by the big banks, which promised only four years ago not to go ahead with a plan to charge customers.

It also flies in the face of their pledges that the many thousands of people whose local branches have been closed would still have easy access to free cash machines. The number of machines which charge has rocketed by 40% in the last six months, to around 20,000 of the country's 50,000 ATMs. Some 70%, around 1,500, of all machines in Post Offices, most of which are operated by Alliance & Leicester, now impose a fee. The annual bill for taking cash out of such machines is currently running at £ 60m, but this is set to spiral.

The Nationwide Building Society has been one of a few voices in the industry to fight the trend. Executive director Stuart Bernau said, "We believe around 40% of cash machines are fee-charging already. I could see this figure rising to more than 50% next year or the year after." Derek French, of the Campaign for Community Banking, said, "We are essentially seeing the introduction of charging by stealth, which is a retrograde step. Access to a large network of free cash machines is part of the contract that banks have with their customers. They can't just opt out."

The banks argue that while 40% of machines impose a fee, they account for only a small proportion of the value of withdrawals. This is expected to soar over the next decade. Banks have increasingly introduced cash machines as a cost-cutting measure. The technology allowed them to close branches, many in rural locations, and sack staff. They reassured angry customers that they would keep 'remote' cash machines in these areas to save customers having to go many miles to the nearest surviving branch. But the policy now seems to be to cut the numbers of free machines to the absolute minimum.

The idea of making customers pay to use cash machines was first floated by Barclays and other banks four years ago. But they dropped it after fierce customer protests. Despite this, there are signs that the banks are actively promoting the introduction of charging machines. The Halifax Bank of Scotland (HBOS) has sold a quarter of its free machines, 816, to a company called Cardpoint for around £75m. It is not yet clear whether Cardpoint, which normally demands up £1.75 a transaction, will impose fees at all of them.

Abbey National has sold 50 free machines at Shell garages to Moneybox, which imposes charges, for an undisclosed sum. Moneybox also operates machines for the Norwich & Peterborough Building Society and Bradford & Bingley. They do not charge on those at the moment, but that is expected to change. Banking analyst Mike Allen, of brokers Numis, has warned, "Over time, we suspect that the banks may wish to exit all or some of their involvement in off-premise automated teller machines."

Until recently, the companies running the charging machines were independent of the major banks, but banks are now moving to buy them up, to rake in the profits from the fees. Earlier in 2004, the Royal Bank of Scotland and NatWest group bought Hanco, the UK's biggest fee-charging company, for £ 80m. It runs 5,000 machines. The practice of charging has not yet spread to hole-in-the wall machines at bank branches, but banks claim the cost of ensuring that machines elsewhere are filled regularly makes it difficult to keep them free to use.

The sums involved are minute, however, when set against industry profits. HSBC, Lloyds TSB, Barclays, RBS and HBOS enjoyed a profits bonanza of around £26bn in 2003, up by an average of 27%. The figure is expected to top £28bn in 2004. MPs on the Treasury Select Committee have announced an inquiry into the threat to free machines. (Source: Mail on Sunday)

Mark Mills heads a £70million cash machine empire which charges bank customers between £1.50 and £1.85 to withdraw their money. In just four years his annual turnover has rocketed from £1m to a massive £36.8m while profits have jumped from £50,000 to a projected £7.8m. His company, Cardpoint, operate 2,800 ATMs at motorway service stations, garages, shopping centres, pubs and hospitals across the country, issuing a staggering £300m each month.

The huge spread of fee-charging machines, currently being investigated by a committee of MPs, has made the former public schoolboy a multi-millionaire at 34. But Mr Mills, who started his first business at 18, organising parties at nightclubs, denied it is a rip-off. He said, "Our business is based on pure choice and supply. No one wants to be charged but consumers would rather have a machine to withdraw money from than none at all."

In June 2004, Cardpoint bought 816 machines from Halifax Bank of Scotland for £75m. Around 100 of these already charge a fee and another 250 will switch over this spring. Cardpoint, which has spacious offices at Blackpool Airport, is now the biggest independent ATM operator and £215,000-a-year chief executive Mr Mills has a £1million house in Lancashire. His company shares are worth £3.6m. (Source: Sunday Mirror)

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