Product category:
Banking / credit / debt
News Release from: Defaqto | Subject: Current accounts
Edited by the Insidemoneytalk Editorial
Team on 18 July 2008
OFT market study on current accounts
The current account charging structure will change
The Office of Fair Trading market study has found both positives and negatives in the current account market On the positive side the OFT believes that: there is a high level of customer satisfaction additional transaction channels have made it easier to manage accounts there are low fees on some transaction elements there is evidence of competition On the negative side the OFT: says that the market as a whole is not working well for consumers believes those who get overdrawn are subsidising the free-in-credit banking for those that do not has concerns over the complexity and transparency of overdraft fees and charges which makes it difficult to compare different accounts on an informed basis many consumers don't contemplate switching their account and for those that do it will generally be as a result of bad experiences at their previous bank there are some barriers to new entrants which prevent rapid market share growth David Black, Principal Consultant of Banking for Defaqto says: "There are no real surprises in the market study but it is difficult to escape the view that the underlying theme does seem to point to the eventual demise of free-in-credit banking in order to allay the concerns over cross-subsidisation
This article was originally published on Insidemoneytalk on 22 Feb 2007 at 8.00am (UK)
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I do not, however, expect to see charges introduced on the limited facility basic bank accounts." "We're also still awaiting the results of the court case and if, as I suspect, this leads to a cap on default charges, albeit with an element of profit permissible, this too will point to a new charging structure as the banks seek to regain lost revenue in other ways." "This is all going to take some time to play out and in the interim we will continue to see the launch of new and amended current account propositions as well as more overtly aggressive marketing of added value accounts which can provide considerable income streams to the provider.".
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