OFT report on personal current accounts

OFT report (120 pages, PDF) on personal current bank accounts in the UK. The report concludes that:

consumers and competition are focused almost exclusively on more visible fees, and not on the less visible elements such as insufficient funds charges and forgone interest –- despite the fact that these make up the vast bulk of banks' revenues.

In the OFT's view, this fact combined with the complexity of arranging a transfer of account between banks means that the market “as a whole is not working well for consumers”. Specifically:

Consumers lose in two ways. A minority lose out significantly [e.g. those who incur a lot of unauthorised overdraft charges], but ultimately everyone suffers if the banks have little incentive to compete vigorously by providing better offers on key elements of their current accounts.

The report “makes no judgement about whether insufficient funds charges pass ... a test of fairness under the Unfair Terms in Consumer Contracts Regulations 1999”.

For further information or advice please contact Franck Latrémolière.

Filed under OFT.

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