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Bank accounts: OFT says significant change needed
The OFT last reviewed the way banks run current accounts for their personal customers in 2008
Continue reading the main storyPersonal Banking
Further significant changes are needed in the market for personal current accounts, the Office of Fair Trading (OFT) has said.
The OFT has been reviewing the way the UK's banks run these accounts, because of concerns over competition and a lack of focus on customers' needs.
Despite improvements since its last review in 2008, it said consumers still lacked confidence to switch accounts.
But the OFT chose not to refer the market to the Competition Commission.
The OFT found that, since 2008, the major banks had increased their market share, occasions when new competitors entered the market remained infrequent, and consumers still only rarely switched to an alternative provider.
However, it also pointed to some specific improvements. For instance, it estimated that consumers had saved up to £928m a year from the fall in unauthorised overdraft charges between 2007 and 2011, though it added that overdraft charging structures remained too complex.
Major changesClive Maxwell, chief executive of the OFT, said that despite some improvements, the market for personal current accounts was still not serving consumers as well as it should.
"Customers still find it difficult to assess which account offers the best deal and lack confidence that they can switch accounts easily. This prevents them from driving effective competition between providers," he said.
But he added that there would be some major changes to the market taking place in the coming months, including the sale of Lloyds and RBS branches - as mandated by European competition authorities - and a new automated account switching service.
The OFT also made some new recommendations to make current account costs more transparent, to make the switching process more reliable and to improve the way unarranged overdrafts are provided.
It said that these changes had the potential to have a positive impact on competition and therefore it had decided not to refer the industry to the Competition Commission.
But Mr Maxwell added: "The retail banking sector needs to become more competitive and customer-focused to ensure that further action by the competition authorities is not required."
The OFT last reviewed the way banks run current accounts for their personal customers in 2008Continue reading the main storyPersonal Banking
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Further significant changes are needed in the market for personal current accounts, the Office of Fair Trading (OFT) has said.
The OFT has been reviewing the way the UK's banks run these accounts, because of concerns over competition and a lack of focus on customers' needs.
Despite improvements since its last review in 2008, it said consumers still lacked confidence to switch accounts.
But the OFT chose not to refer the market to the Competition Commission.
The OFT found that, since 2008, the major banks had increased their market share, occasions when new competitors entered the market remained infrequent, and consumers still only rarely switched to an alternative provider.
However, it also pointed to some specific improvements. For instance, it estimated that consumers had saved up to £928m a year from the fall in unauthorised overdraft charges between 2007 and 2011, though it added that overdraft charging structures remained too complex.
Major changesClive Maxwell, chief executive of the OFT, said that despite some improvements, the market for personal current accounts was still not serving consumers as well as it should.
"Customers still find it difficult to assess which account offers the best deal and lack confidence that they can switch accounts easily. This prevents them from driving effective competition between providers," he said.
But he added that there would be some major changes to the market taking place in the coming months, including the sale of Lloyds and RBS branches - as mandated by European competition authorities - and a new automated account switching service.
The OFT also made some new recommendations to make current account costs more transparent, to make the switching process more reliable and to improve the way unarranged overdrafts are provided.
It said that these changes had the potential to have a positive impact on competition and therefore it had decided not to refer the industry to the Competition Commission.
But Mr Maxwell added: "The retail banking sector needs to become more competitive and customer-focused to ensure that further action by the competition authorities is not required."
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