Charities with HSBC accounts face a host of new charges from November after the bank announced it will charge a £60 a year fee just to keep the accounts open.
The bank has also introduced charges for branch transactions including a 0.4 per cent fee to pay in and withdraw cash, a charge of £4 on a £1,000 donation, and a fee of 40p to deposit a cheque.
Charities will also be charged a 1.5 per cent fee when withdrawing change over the counter for fundraising events.
For more than a decade the bank has allowed charities and non-profit organisations to manage their finances for free, as long as they made no more than £100,000 a year.
But the bank said it has had to increase its prices to more accurately reflect the cost of providing and maintaining a business bank account, and the value and benefits of the proposition.
HSBC contends that its £5 monthly account fee is lower than standard banking tariffs and its offer is competitive, while the new account is not subject to the £100,000 annual income cap so will be available to a wider range of charities.
The bank would not say how many customers will be affected, but confirmed it is writing to all the charities involved to make them aware of the changes and to support them to reduce charges by migrating from the use of cash and cheques to electronic transactions. It stressed that it had not taken the decision lightly.
Membership bodies have warned that the increased costs will reduce the ability of charities to deliver services in the communities they serve.
Rebecca Young, lead policy and influencing manager at the National Council for Voluntary Organisations, pointed out that 81 per cent of voluntary organisations have an income of less than £100,000.
She added: “Any increases in unnecessary costs and banking charges will reduce the funding that can be invested in the key work of charities and the difference they make in every community.”
Clare Mills, head of communications and external affairs at the membership body Navca, said: “With HSBC introducing charges for charity accounts, many organisations will be faced with meeting these costs or dealing with the significant administrative and time burden that changing banks involves – and it’s unclear at this stage if other banks will be adopting the same new charging structure.”
Mills said that Navca has been working with the Charity Commission and UK Finance to make the banks aware of the many difficulties charities and voluntary organisations face every day with their banking.
Rita Chadha, chief executive of the Small Charities Coalition, said that HSBC could have given charities more notice.
She added: “All organisations need to make money, but the banking charges being introduced by so many high street banks are doing nothing to ‘level up’ our nation.
“We would encourage all banks to look at the contradiction between their own CSR policies and their commitment to inclusion.”
A HSBC UK spokesperson said: “Over the years, we have made significant enhancements to our business banking proposition to meet the evolving needs of our customers.
“We are committed to supporting UK charities and not-for-profits and are confident that our offer remains very competitive.”