BANK RUN AS A RESULT OF EXOBITANT CHGS

Up to 20,000 customers have left First Direct after it started charging a monthly current account management fee in February.
The controversial £10 a month fee was levied on customers who paid in less than £1,500 a month into their account.

An estimated 195,000 of First Direct's 1.3 million customers were affected by the change.

About 1 in 10 of these customers have since left the bank rather than pay the charge, it has been estimated.

The fee was waived if customers opened a savings account or bought products such as home insurance or loans from the internet and telephone bank.

The bank said the introduction of a fee was aimed at holders of dormant or rarely used accounts.

It added that 40,000 of its basic accounts are not used at all while a further 250,000 accounts see fewer than 10 transactions a month.

First Direct said it was not alarmed by the decision of so many customers to leave it.

"We have seen a combination of people closing dormant accounts and customers with active accounts coming to us," A First Direct spokesman said.

"We are pleased with the customer response. Most customers have another product with us and were unaffected by the change," he added.

At the time that the monthly fee was announced some consumer groups said that it heralded the end to free current account banking.

Thousands of UK consumers have been suing their banks for the return of unauthorised overdraft fees.

They argue these fees are illegal but bank industry insiders have said that they are a payment for a service and without them they may have to charge for managing current accounts.

The Office of Fair Trading (OFT) is currently investigating free banking to see if it is truly free or whether banks are in fact making money from peoples' accounts through activities such as taking up to 5 days to clear a cheque.