The decision by First Direct to introduce monthly fees to operate a current account has been met with almost universal dismay by consumer groups who are claiming that the move will herald the end of free banking in the UK.

But with only one bank having thus far made the decision to charge customers for banking services, is the end of free banking in the UK really in sight?

Most banks have said on the record that at present they have no intentions of introducing fees for current accounts.

A spokesman for HBOS said: "We are committed to free banking," while Royal Bank of Scotland, Lloyds TSB and Alliance & Leicester have claimed they have no plans to follow First Direct's lead.

Therefore, at first sight concerns that free banking in the UK is in imminent danger appear to be premature.

However, many economic observers agree that while First Direct is only a small bank it is owned by global banking corporation HSBC which may be piloting current account fees ahead of their introduction for all HSBC customers in the UK.

Indeed, even though most UK banks have said they have no plans to introduce fees for banking services, the success or failure of First Direct's move will inevitably influence the future strategy of all UK banks, which have seen their profits hit hard by the OFT's decision to outlaw excessive late credit card payment charges.

Andrew Hagger, head of news and press at financial information provider, Moneyfacts, commented: "UK banks have struggled to make decent returns from their retail banking operations, and if the OFT investigation into penalty fees results in fee capping similar to that seen in the credit card market, it will be no surprise to see the banks looking for ways to recoup revenue by other means."

To fully determine the consumer implications of First Direct's move the realities of the charges it has imposed must be understood.

The bank said that from February customers who either fail to pay in or maintain a balance of at least £1,500 a month would be charged £10 a month for a standard current account in a bid to encourage its customers to see First Direct as their "primary bank".

However, customers with balances of less than £1,500 can avoid paying the charges by taking out another financial product such as a loan.

First Direct chief executive Chris Pilling said that the move will affect only a "small minority" of customers and would not discriminate against low-income families.

But several consumer groups have disagreed. Motley Fool calculated that to maintain a post-tax income of £1,500 a month an individual would need to be earning approximately £25,000 a year, a salary that only three in ten UK adults enjoy.

As a result, it is families on low incomes that are expected to be most affected by charges for current accounts.

Defaqto Black, meanwhile, has predicted that the adoption of current account fees would lead banking in the UK down one of two roads.

Either bans will introduce obligatory fees, or banks will move to a system whereby customers are charged on a per transaction basis, both of which would most likely hit low-income families the hardest.

Ultimately, if First Direct's move proves successful and, more importantly, lucrative, it is difficult to conceive of a situation where the rest of Britain's banks do not follow suit.