OFT wants review of bank accounts market

The government watchdog, the Office of Fair Trading, has been calling for a review of the bank account system in the UK, claiming that consumers are often getting a raw deal because arrangement that are currently in existence when it comes to the eight billion pound bank account market were simply not adequate. The OFT went on to state that banks were not clear enough about the charges that were applied to customers’ accounts, which makes things confusing for accountholders.

The OFT also said that account holders are often unaware of how much they pay in charges, what the charges are for, and how much they earn in interest when it comes to their current accounts. Officials went on to state that the revenue generated by bank accounts was more than that generated by credit cards and savings accounts combined, and that the situation was resulting in weakened incentive to compete in the market amongst lenders.

In a report the OFT said “In the view of the OFT, the status quo is not satisfactory.”

An OFT official continued: “Personal current accounts are a vital gateway to effective participation in the economy. But this market is not serving consumers well. Consumers lack the information they need to choose the best deal, and this in turn weakens the banks’ incentives to compete.”

The report indicates that the largest provider of current accounts, Lloyds TSB, took a £76 million charge last year to cover the cost of reclaimed overdraft fees.

The OFT said: “This number looks low relative to what other banks have taken and Lloyds has a number one market share, so Lloyds may be seen as the UK bank to sell in reaction to this.”

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