Complicated overdraft charges make it almost impossible for bank customers to choose the cheapest or most appropriate account for their needs.
As a result, banks may not be bothering to compete with each other, leading to higher overdraft charges for all.
That's the damning conclusion of the Competition and Markets Authority (CMA), which yesterday announced a full-scale investigation into Britain's biggest banks.
It said it will launch an 18-month inquiry that could lead to major banking reforms. These include a possible ban on complex fees and a cap on overdraft charges.
The big banks could also be forced to allow smaller rivals to use their branch networks and payment systems.
The CMA's report pointed out that the largest four providers – Barclays, HSBC, Lloyds Banking Group and the Royal Bank of Scotland group – have more than 77 per cent of the current account market in the UK.
But despite high charges and confusing fees, annual switching levels remain low, with only a tiny 3 per cent of personal customers changing bank each year.
The authority also slammed the big banks for failing to provide decent services to small businesses.
"Our studies have found that significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks," said the CMA's chief executive, Alex Chisholm.
News of the investigation was welcomed by consumer groups. Richard Lloyd, executive director of Which?, said: "For too long, customers have been getting a raw deal from the biggest high-street banks, so a full inquiry into the current account market is welcome, if long overdue."
Research by Which? discovered that someone who goes into the red with the wrong account could end up paying £183 more in fees and charges each month than they may have been charged with the right account.
Citizens Advice's chief executive, Gillian Guy, said: "Customers need better current accounts and an investigation into competition is an opportunity to address this."
The bank current account market needs a "seismic change" to kickstart competition, reckons banking analyst David Black at Consumer Intelligence. "One of the issues that challenges consumers is the difficulty in comparing overdraft costs because of the vast array of different overdraft tariffs and structures in evidence."
Mr Lloyd said the banks should heed the CMA's warning. "They should not waste any time in making changes to put the interests of their customers first."