Running ATMs and branches is not cost-free, Mr Beale says

Graham Beale, the Nationwide Building Society's incoming chief executive, told the Daily Telegraph fees would properly reflect current account costs.

But Mr Beale added Nationwide would not act unilaterally by imposing a fee.

Last November, First Direct said it would start charging some current account customers a monthly fee.

Reflecting costs

UK banks and building societies have traditionally offered customers free current accounts.

In a way, I do believe fee-based banking is a fairer proposition Graham Beale, Nationwide

In many other parts of Europe customers have to pay for current account services.

Mr Beale said that charging a monthly fee would more truly reflect the costs of running a current account.

"In a way, I do believe fee-based banking is a fairer proposition," Mr Beale said.

"It's not free to run an ATM or a branch, so what it means is that when you apply charges to delinquent accounts they bear the large proportion of that cost.

"In an ideal world, the costs would be shared," Mr Beale added.

However, when Mr Beale takes the helm at the Nationwide on 1 April customers will not instantly be hit with current account fees.

Mr Beale said only if the industry changes its approach to fees would the Nationwide follow.

Under threat

Banking analysts have warned that free banking may be under threat.

This is because penalty charges, levied on people who exceed their overdraft or credit card limits, are under attack.

A widely-publicised internet campaign has grown around the reclaiming of penalty charges.

Campaigners argue that under consumer law, the imposition of excessive penalties is not allowed.

To date, it is estimated that several thousand customers have been able to reclaim their penalty charges by threatening court action.

In addition, last year the Office of Fair Trading (OFT) told credit card providers that they should reduce their penalty charges from about �30 to about �12.

The OFT is now looking at the wider issue of penalty charges.

If it decides they are excessive, an important revenue stream for banks and building societies will be cut off.