Nearly 20,000 ditch HSBC's First Direct over £10 charge

The group, which prides itself on its customer service, became the first bank to levy a monthly fee when it began charging £10 a month to current account customers who do not pay more than £1,500 into their account each month.

When the bank first announced the move in November it estimated that around 195,000 of its 1.3 million customers would be affected, and it is thought as many as one in 10 of these have now closed their accounts.

First Direct declined to confirm the figure, but a spokesman said : "A small number of people out of our 1.3 million customer base have closed accounts following our decision to charge, but we are pleased with the numbers given that it was a significant move for us."

The group introduced the monthly charge in a bid to tackle the issue of dormant accounts.

It said in November that it had around 40,000 accounts that had not been used for a least three months, as well as more than 250,000 that had fewer than 10 transactions a month carried out on them.

By waiving the £10 charge if people paid at least £1,500 into their account each month, it aimed to encourage people to use First Direct as their main bank.

People can also avoid the fee if they maintain a balance of more than £1,500 in their account or if they hold another product with it such as a savings account, mortgage or home insurance.

The bank would not say how many people were now paying a fee, but said it was "far fewer" than it had estimated in November.

The spokesman said: "Significant numbers of people have taken out more products.

"We are very pleased with the way things have gone. Many more customers are now using First Direct as their main bank."

The issue of banking charges is currently being looked at by the Office of Fair Trading.

Thousands of customers are also trying to reclaim penalty charges of up to £30 for breaching overdraft limits or bouncing a single payment.

Last week Yorkshire Bank and Alliance and Leicester were ordered by a court to disclose how they calculate their penalty fees and what the actual cost to them of servicing a bounced payment is.