Four out of five people would ditch their bank to avoid monthly fees

• Outrage as banking regulator gives green light to charge monthly fees for current accounts
• Poorest in society will be hit the hardest

A new poll has found that almost four out of five people would change their bank to avoid monthly fees.

The polling commissioned by the Centre for Social Justice and conducted by Opinium reveals that an overwhelming 79 per cent of people on annual incomes below £15,000 would change their bank to avoid monthly fees for what are currently free bank accounts. 75 per cent of all consumers said they are likely or very likely to switch bank.

The findings come following comments by Nikhil Rathi, Chief Executive of the Financial Conduct Authority (FCA), who confirmed that it would not obstruct banks’ efforts to implement such fees, despite concerns that levying them would hurt those on the lowest incomes.

In 2016, the Competition and Markets Authority warned that the effect of ending free current accounts could result in “distributional impacts that many would consider undesirable”.  It noted that those with small credit balances could face fees in excess of their interest receipts and would be worse off.

For decades, the ‘free if in credit’ model has been a cornerstone of Britain’s retail banking, attracting customers with the promise of no-cost current accounts and branch network services in return for depositing their savings. However, the landscape has shifted dramatically, with major banks closing thousands of branches due to decreased usage and fierce competition from digital-first challengers. The FCA has also clashed with these banks over the sluggish transmission of increased interest rates to savers.

Commenting on the polling, Matthew Greenwood, Head of Debt at the Centre for Social Justice, 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 pernicious impact of the so-called poverty premium, where the poorest are having to pay more than the richest for basic services – this step will only make this worse.”

The prospect of banks charging for current accounts, now unimpeded by regulatory intervention, is set to deepen the woes of already cash-strapped consumers. Research by Mintel underscores the high value consumers place on free banking services, suggesting that the introduction of fees could not only lead to a mass migration of customers but also tarnish the long-standing trust between banks and the public.