83% to switch bank account if fees brought in

More than eight in ten Britons say they would switch providers if banks were to introduce monthly or annual fees for standard current accounts, new research shows.

The poll by comparison site uSwitch.com shows the introduction of banking fees could be "one of the biggest ever shake-ups" in the current account market, particularly as the average length of time consumers have held their account for is 16 years.

The study shows 71 per cent of Brits have been charged fees for going over authorised overdraft limits and 58 per cent have been charged for direct debit or standing order payments bouncing.

Other top reasons for incurring charges are making debit payments without having sufficient funds, (affecting 27 per cent), cheques bouncing (affecting 24 per cent), and cash withdrawals without sufficient funds (affecting 16 per cent).

The findings come as the Office of Fair Trading is set to report its initial findings from its investigation into current account charges this month, which affect 18.96 million people and generate £4 billion for banks.

The investigation is set to recommend a cap on fees, which will see banks' profit margins squeezed and free banking likely to be replaced by monthly and annual fees, uSwitch says.

"The UK is one of the only places in the world that doesn't charge for current accounts," commented Nick White, uSwitch director of financial services.

"Customers have enjoyed free banking on current accounts for the past 23 years but the current backlash against charges for items such as overdrafts and bounced cheques, as well as ongoing investigations into lucrative financial products such as payment protection insurance on loans and credit cards, will serve as catalyst for the fast introduction of monthly fees."

The study also reveals Britons believe £4.07 would be a fair bank charge for going over overdraft limits, cheques bouncing and other instances where fees apply. This would see banks' revenue from fees drop 84 per cent to £646 million.

Two thirds say a £10 "buffer zone" should be introduced, where penalty fees do not apply, and around a quarter believe current account should just be frozen as soon as they go overdrawn so fees will not apply.