Back in 2008, the OFT published a report into the country's current account market, concluding that the £8billion market simply wasn't working well enough for UK consumers.
Its findings were supported just last month by a study released by the European Commission. It argued that retail bankers were actually failing consumers through complex pricing, hidden charges and providing incomplete or unclear information.
But now this could change, thanks to a new agreement. Banks and building societies, making up almost 95% of the market, have signed up to improve in two key areas - transparency and switching.
John Fingleton, chief executive of the OFT, said this commitment could improve competition within the current account market.
He explained: "As consumers become more aware of the costs of their account and more confident in switching as a means to get better value, so banks will need to offer more competitive and innovative products and services to attract as well as retain customers."
Transparency
It should be easier for customers to understand the costs of their accounts and compare them with others, the OFT argued.
To make that easier, current account providers have agreed the following:
- To introduce an annual summary showing each consumer the cost of the current account - much like a renewal quote for an insurance policy.
- To highlight charges more clearly on statements, so account holders can clearly see what they've paid.
- To give their customers average credit and debit balances, allowing them to more easily see the benefits of switching bank.
- To use illustrative examples to give consumers a clearer idea of the costs of using unauthorised overdrafts.
Switching
Here at moneysupermarket.com, we often urge people to consider switching their current accounts if there are more competitive deals available. Many people fail to do so because they are worried about their direct debits and the general inconvenience of changing providers.
Now, Bacs, the UK payment processor, and the banks have agreed to take steps that will reduce the number of problems caused by transferring direct debits, as well as reduce the impact these problems have on consumers.
In addition, a new website will be launched that provides guidance to consumers and raises awareness of the automatic switching process available.
Bank charges
There is considerable interest in the charges levied against consumers for going into unauthorised overdrafts.
Unfortunately, this issue hasn't been resolved today because the OFT is currently investigating the market under the Unfair Terms in Consumer Contracts Regulations 1999.
The OFT said it will provide more guidance once the pending Supreme Court judgement has been made.
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