The study will help the Office of Fair Trading (OFT) to consider the current level and incidence of the charges in terms of efficiency, transparency, value and consumer choice within the personal current accounts market. This will be the most wide-ranging study into personal banking to date.
This move follows the OFT’s recent fact-finding exercise into unauthorized overdraft charges. The regulator said that it shares public concern about the current level and incidence of charges, but believes that any quick-fix solution might have unintended and far-reaching consequences across the sector, and for consumers as a whole.
The wider study will examine a number of things, including whether the widespread provision of so-called free banking delivers sufficiently high levels of transparency and value for customers, and the implications for competition and consumers if there were to be a shift away from the widespread provision of these type of current accounts.
The regulator will also look into the fairness and impact on consumers of the incidence and level of unauthorized overdraft charges, in the context of other charges and any interest payments made for current account services.
This market study will enable the OFT to consider wider questions about transparency and value in the provision of personal current accounts. This will provide the necessary context for assessing the fairness of unauthorized overdraft and returned item charge before we apply the law in this area, commented John Fingleton, OFT chief executive.
Our ultimate objective is a competitive retail banking market in which informed and active consumers drive strong competition and high levels of customer service among banks long term, with minimum regulatory intervention, he concluded.
The OFT market study will be undertaken in consultation with industry, industry representatives and consumer advice bodies, as well as the Financial Services Authority, Financial Ombudsman Service and the UK government.
