uSwitch.com response to today's report from the Office of Fair Trading

In response to today's report from the Office of Fair Trading (OFT), outlining that current accounts in the UK are "not working well for consumers",

Simeon Linstead, Head of Personal Finance at uSwitch.com, comments: "The OFT is attempting to tackle two separate issues in today's market study about the state of current accounts in the UK - the lack of transparency surrounding bank charges and the fact that competition is not working effectively.

"The size of the current account market is vast - there are approximately 64 million accounts in the UK, of which 54 million are estimated to be active.

The OFT estimates banks earned ?8.3 billion in revenues from current accounts, the equivalent of ?152 per active bank account and represents a higher revenue stream for the banks than savings and credit cards combined.

However, limited understanding of key account elements, combined with lack of consumer information and low confidence in switching means that banks have little incentive to offer better deals on bank charges and interest rates and in turn this stifles competition as consumers have little incentive to switch.

"In spite of the high level of dissatisfaction with their bank, the number of people who have actually switched current accounts has remained relatively small over the past decade, and may represent as little as one per cent of the total number of current accounts in the market.

The current account market has more competitive deals now than ever before, but consumers continue to display a lack of interest in switching to more competitive products.

Britain's current account customers are pouring money down the drain by not looking closely enough at the real cost of sticking with their existing bank account.

In fact, on a national scale, consumers could be wasting nearly ?1.9 billion if they stick with an average current account from one of the big banks." uSwitch.com research shows that two thirds (64%) of current account customers have never considered switching their bank accounts - the main reason being that 'it's too much hassle or too time consuming'.

However, it's a popular misconception that switching current accounts is a potential minefield - in reality, it couldn't be easier.

With all banks obliged to close or move a customer's bank account, without charge, upon request, and many banks offering a free switching service, now is the time to look around for another provider.

Considering that there so many accounts to choose from and competition for consumer's money is fierce, sticking with a current provider without shopping around for the best deal makes no sense.

"We've become a nation of switchers in every respect apart from our current accounts, so our advice is simple - everyone should check they are getting the best deal from their bank, and if not, they should do something about it.

It's one of the simplest ways to save money." A better deal for your current account: Each consumer needs to ask themselves the following questions: Are you often in credit? If so, look at the credit interest available as many of the high street banks pay a derisory rate.

Are you often overdrawn? If so, look at what interest is charged on authorised and unauthorised overdrafts with your current provider.

Many providers will often sting you with high fees and interest rates.

What additional charges and fees does your current provider levy? Look at how much you could save on bounced cheques and annual fees by switching provider.

Key highlights from OFT research: Much of banks' revenue from current accounts is derived opaquely, with 81 per cent of income coming from two sources: insufficient funds charges (?2.6bn) and net credit interest income made from current account deposits (?4.1bn).

Current accounts are used on a regular basis by 90% of consumers, but 88% of people receive an annual interest rate of less than 0.5%.

In 2006 the aggregate revenue of banks earned from current accounts was approximately ?8.3 billion.

Therefore if the OFT was to win its drawn out battle with UK banks regarding these charges - UK banks' annual revenue would be dealt a massive blow.

Between 2003 - 2007 insufficient fund charges increased by an average of 17%.

The average daily unauthorised overdraft balance over the year in 2006 was ?680 million but involved some ?1.5 billion in paid item and maintenance fees.

This is a return of over 220% on the balances.

uSwitch.com estimates 38% of current account customers have incurred Bank charges paying out an average of ?742 each over the last six years.

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