Debt fear as end of free banking ‘in sight’

Commenting on first direct’s decision to charge £10 for current account use with small balances or low monthly deposits from next February, Defaqto called it “another step in the seemingly inevitable move towards the end of free banking”.

David Black, Defaqto’s head of banking, said: “This is the first time a monthly fee has been proposed.

“First direct’s move is in effect a half-way house as it is leaving the door open to free banking for the more affluent and may have the added benefit to first direct of ridding them of the expense of servicing the needs of people who are using them as a secondary current account.”

He added that this move could be followed by other bankers, making it costly for those on low incomes hoping that a bank account would form part of their debt management plan.

“Regrettably I believe that this announcement is another step in the seemingly inevitable move towards paying for the majority of full service current accounts,” added Mr Black.