Banks charge us £9bn a year for current accounts through complex fees

Banks give a 'raw deal' for current accounts says Office of Fair Trading

Annual profit is £139 per customer, yet little interest is paid out

Complex charges are allowing the big banks to make almost £9billion a year from current account holders, a report reveals.
Five years after many banks were saved by receiving billions of pounds in public money, they continue to give customers a raw deal, the Office of Fair Trading says.
Little or no interest is paid on balances in current accounts, people do not understand overdraft charges and there is no sign the banks compete to offer a better deal, the report says.

Big profits: Banks make the equivalent of £139 per customer and year on current accounts, mostly through loans using customers' money

Competition has declined since the financial crisis that saw operations such as the Halifax, Northern Rock and Bradford & Bingley swallowed up or shut.
A review of the current account market found that 75 per cent of people never change their bank.

This means that they are effectively a captive market for banks to sell expensive loans, credit cards, mortgages and insurance.
As a result, the banks are making £8.8billion a year from current accounts – the equivalent of £139 per customer – the OFT says.
Much of this is made by using the billions of pounds of customers’ money sitting in current accounts to loan out at high rates.

Complex payments: When current account customers go in the red they are often subjected to fees which are difficult to understand

At the same time, banks hit people who go into the red with charges that are difficult to understand and compare.
Comparing the cost of current accounts ‘continues to be challenging’ and people fear switching banks if they are mistreated, the OFT says.
It identified a lack of competition, unclear costs and low levels of innovation.
Chief executive Clive Maxwell said: ‘Personal current accounts are critical to the efficient functioning of the UK economy. Despite some improvements, this market is 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. The retail banking sector needs to become more competitive and customer-focused.’
Laura Willoughby, chief executive of Move Your Money campaign, which encourages customers to switch banks, called the report ‘damning’.
‘Five years on from receiving the biggest taxpayer bailout in history, the big banks are still failing to deliver even the most basic of services to their customers,’ she said.
The British Bankers’ Association said reductions in overdraft charges mean customers are saving almost £1billion a year.
Chief executive Anthony Browne said: ‘The banking industry is committed to modernising and improving current accounts so that customers get the best possible service.’