Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

OFT raps banks for complex current accounts

Banks make £152 a year from each account

Twenty pound note and coins

If you’re not getting the most from your account provider, you should take your business elsewhere

Many customers don’t know how much they’re paying in bank charges for their current account, the Office of Fair Trading (OFT) said today.

The trading watchdog criticised banks for offering over-complicated accounts, and for being less than transparent about bank charges, making it difficult for customers to compare their account with others.

This means that consumers have ‘little incentive’ to switch – and just 6% of customers surveyed by the OFT had switched accounts in the past 12 months.

Switching accounts

The study also found that UK banks earn £8.3bn from personal current accounts each year – or £152 per active account.

This includes £2.6bn in overdraft charges and more than 12.6 million accounts – or 23% of active accounts – incurred at least one ‘insufficient funds’ charge in 2006, the OFT said.

Which? personal finance campaigner Phil Jones said: ‘This confirms what we’ve always argued – that there’s no such thing as free banking. Most people have no idea how much they pay for their current account and the market is uncompetitive.

‘It’s a Catch-22 situation – people aren’t switching because there’s little difference between the big banks’ current accounts and, because people aren’t switching, banks have little incentive to compete for customers. 

‘What’s needed is greater transparency, competitive rates and for switching account providers to be made easier.’

Overdraft charges

OFT chief executive John Fingleton said: ‘There is much the banks could do to improve how the market works, and we hope this report will encourage them to take steps to do so in the near future.’

A spokesman for the British Bankers’ Association (BBA) said: ‘We are disappointed that the report presented only revenues without taking into perspective any of the costs being incurred in respect of running accounts.’

The study comes in the wake of the OFT’s recent High Court victory on the issue of whether the watchdog could investigate the fairness of unauthorised bank overdraft charges. 


Although the banks have appealed this ruling, the OFT has already started investigating what level of charges would be fair and it’s due to give its conclusion to the banks soon. If the banks disagree with the OFT’s view, this will also end up in court, around the same time as the appeal hearing. Both hearings are likely to happen this autumn.

Which? is encouraging consumers who feel they’ve been hit by excessive unauthorised overdraft charges to lodge a complaint with their bank. 

The study reported today began before the OFT’s test case on whether it could consider the fairness of charges, and today’s report does not affect the outcome of the case.

Back to top