Simon Read: The OFT has let us down by not referring current accounts

 

The Office of Fair Trading weighed into the bank accounts row yesterday. The government's consumer watchdog accused Britain's banks of failing to focus on customers' needs.

In other words, our banks are more concerned about profits than service. The OFT said that there is a lack of competition and low levels of innovation by banks.

Meanwhile, very few people switch, despite poor service and high charges, because of confusing costs and a lack of real choices.

The report is damning, but says nothing that we don't know already. My weekly postbag contains many emails and letters about banks but only one in the almost four years that I've been in this job actually praised one of the big high street banks.

Even then the surprisingly decent service only came about – it turns out – because the bank in question had been forced by the regulator to contact customers and put things right.

So why are we now, five years after the banking crisis hit, still being confronted by confusing current accounts and poor service? Is it because the banks are still arrogant enough to think they can continue to get away with ripping us off?

Despite calls for it to do so the OFT refused to refer the current accounts market to the Competition Commission. That's because it believes that there are improvements afoot.

It reported: "A number of major developments are expected in the market over coming months, including the sale of branches from both Lloyds Banking Group and Royal Bank of Scotland, a new automated account switching service and the completion of existing initiatives intended to make it easier for customers to compare products and services." Indeed, Lloyds was quick to get in touch yesterday to blow its own trumpet about what it calls its "world-leading seven-day switching service", which will launch in September 2013.

As a Lloyds customer I can report that it's impossible to switch online from a high-cost current account to a lower-cost or free one.

However, there's a button on its banking site that encourages you to upgrade your account to an even higher-cost one.

That tells you all you need to know about the bank's continuing attitude to customers. It simply wants to take as much cash off them as it can.

As the OFT pointed out yesterday, current accounts are worth £9bn to Britain's banks. They want to protect as much of that profit as they can.

Particularly as they've been forced to hand over an estimated £15bn in compensation to people they flogged useless and expensive payment protection insurance to. The OFT has made some recommendations to make current account costs more transparent, the switching process more reliable and improve the way in which unarranged overdrafts are provided.

But the fact that it swerved the chance to put real pressure on banks by referring the market to the Competition Commission is regrettable. The banks aren't totally off the hook, though. The OFT said it will revisit the market by 2015.

If banks have failed to make current accounts easier to understand and easy to switch by then, a referral should be a formality.

In the meantime we should all put pressure on the big banks by switching to rivals. What are the alternatives? You could start by considering the mutuals such as Co-operative Bank or the Nationwide building society.

s.read@independent.co.uk

Twitter: @simonnread

PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Extras
indybest
News
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
education
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Junior Research Analyst - Recruitment Resourcer

    £18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

    Senior Analyst - Financial Modelling

    competitive: Progressive Recruitment: This really is a fantastic chance to joi...

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Business Anaylst

    £60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

    Day In a Page

    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform