Banks warned of revolt over monthly charges

BANKS risk a customer revolt if monthly fees are introduced for current accounts.

Three out of four people say they are likely or very likely to ditch them if charges are introduced.

Fears that free current account banking could end were heightened this month when Nikhil Rathi, of the Financial Conduct Authority, said the regulator would not “stand in the way” if business models change.

Banks have closed thousands of branches and face new competition from online rivals.

But the research for the Centre for Social Justice suggests bosses will face an angry backlash if customers who stay in credit are hit with fees. And opposition is even higher among those on low incomes.

Four out of five earning less than £15,000 said they would switch to avoid charges.

Matthew Greenwood, head of debt at the influential think tank, said: “This poll reveals the huge disruption the removal of free banking would have on people, particularly those who can least afford the fees. The regulator’s consent for banks to take this step shows alarming disregard for these customers and will erode their choice and ability to secure the banking services most of us take for granted.

“We are already seeing the impact of the ‘poverty premium’, where the poorest are having to pay more than the richest for basic services.”

The FCA argues free banking for standard accounts is a “market and commercial decision, not a regulatory requirement”.

However, major banks remain required to offer free accounts for people who do not qualify for standard services, often because they have a poor credit history.

These “basic” accounts do not come with a cheque book or overdraft services.

A spokesperson for UK Finance, which represents the banking industry, said: “There is a wide range of different current accounts available and a competitive switching market. Some accounts have a monthly fee as is more common in other countries but most current accounts in the UK do not have any sort of monthly fee.

“A number of major banks have publicly stated they have no plans to charge fees.

“Alongside this, the nine largest personal current account providers are required to offer basic bank accounts that are fee-free – HM Treasury’s most recent statistics show over seven million have been opened.”

Santander offers a free Everyday Current Account alongside an Edge-up account. For a £5 monthly fee, customers earn cash back on spending, and interest on their in-credit balances.

Barclays also offers free standard accounts as well as paid-for options.

Both Nationwide and HSBC said they have no plans to introduce charges on their current accounts.