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October 8, 2009

Banks act on current account transparency and switching

by Gill Montia

Story link: Banks act on current account transparency and switching

The UK’s High Street banks have reached an agreement with the Office of Fair Trading (OFT) which means that charges on personal current accounts will be made more transparent, and the switching process “more reliable and trusted”.

Last year, the OFT completed a market study which identified various problem areas among banks’ customers, including “real and perceived” difficulties over switching accounts, and the way in which unauthorised overdraft charges are applied.

In response to the study, banks have pledged to introduce an annual account summary for every customer, which the OFT hopes will allow consumers to focus on value, and encourage shopping around.

In addition, charges are to be shown prominently on monthly statements and average credit and debit balances will be supplied to allow consumers to estimate the potential benefits of switching banks.

Other measures worked out with payments processor, Bacs, should ease problems that can arise with Direct Debits for consumers who choose to switch.

Finally, banks will produce “illustrative scenarios” for unauthorised overdraft charges, giving consumers a feel for the likely costs incurred for different patterns of use.

For its part, the OFT is updating its Consumer Direct website with additional advice on bank accounts and an interest calculator.

OFT chief executive, John Fingleton, says: “As consumers become more aware of the costs of their account and more confident in switching as a means to get better value, so banks will need to offer more competitive and innovative products and services to attract as well as retain customers.”

 

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