Current Accounts Too Complex

Current Accounts Too Complex

The Office of Fair Trading (OFT) has claimed the market in personal current accounts lacks transparency, making it hard for customers to compare bank account offers.  According to the report, only 6 per cent of those surveyed had switched accounts in the last 12 months, making it one of the lowest switching rates in Europe.  A significant number of customers do not know how much they actually pay in bank charges, either before or after they are incurred and over three-quarters do not know the credit interest rate of their current account.

The OFT calculated that in 2006, 1.4m people paid more than £500 a year in bank charges, often the low income and low saving customers.  The report also found that much of banks’ revenue from current accounts is derived opaquely, with 81 per cent of income coming from two sources: insufficient funds charges, at £2.6bn and net credit interest income, at £4.1bn.

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