Watchdog calls for shake-up of bank accounts

The consumer affairs watchdog called on Wednesday for a shake-up of the 8 billion pound market for personal bank accounts, saying existing arrangements were not working well for consumers.

The Office of Fair Trading (OFT) said that much of banks' revenues from current accounts was derived opaquely, and that many customers do not know how much they pay in bank charges or how much interest they earn on balances in credit.

"In the view of the OFT the status quo is not satisfactory," the watchdog said, publishing the findings of its report "Personal current accounts in the UK."

"The OFT will spend the coming months engaging with banks and consumer groups to try to achieve greater clarity, transparency and consumer empowerment in this market, either through voluntary change or, if necessary, through other routes, potentially including greater regulatory intervention or a reference of the market to the Competition Commission," it said.

The OFT said there was little incentive for consumers to switch current accounts and that when the switching process goes wrong, they end up paying a significant proportion of the costs.