Market study into personal current accounts

Launched: April 2007

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Purpose of the study

To provide the context for the OFT's investigation into the fairness of the level and application of unauthorised overdraft charges.

To take a broad, strategic, view of the market, looking in particular at:

• Price transparency - do consumers understand what they are paying for their PCA? Can they predict the overall actual cost of their account?
  
  
• Switching - do consumers have confidence in the switching process?

(Study followed in-house work.)

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Findings

Our July 2008 report found a number of concerns which we believe need addressing:

1. low levels of transparency over charges and costs, coupled with a high proportion of banks' total revenues made on charges and costs

2. the complexity of the charges makes it harder for consumers to control the costs they incur (some pay significant amounts, 1.4 million consumers paid over £500 in charges)

3.  a significant group of consumers underestimate the level and frequency of banks' charges, and

4. a general perception among consumers, not completely unfounded, that switching is complex and risky, contributing to low levels of switching between banks. See press release for further details.

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Recommendations

To be confirmed.

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Action following market study

• Personal current accounts in the UK
• Personal current accounts - test case

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Market study details and report

Download the Executive summary July 2008 (pdf 146 kb) July

Download Personal current accounts market study - a consultation paper  16 July 2008 (pdf 137kb) 

Download Personal current accounts in the UK - an OFT market study  16 July 2008 (pdf 1.2Mb)

See press release OFT announces decision and next steps on bank charges 22 December 2009.

Download the annexes of the report

Annexe A - Legal and regulatory framework (pdf 187 kb)
Annexe B - Summary report of review of information banks provide to consumers and of price comparison sites (pdf 101 kb)
Annexe C - Free-if-in-credit personal current accounts (pdf 250 kb)
Annexe D - Personal current account consumer research (pdf 589 kb)
Annexe E - Psychology of personal current accounts (pdf 170 kb)
Annexe F - Public policy context (pdf 87 kb)

See press release 'Personal current account market not working well for consumers, says OFT' 16 July 2008

See press release 'OFT welcomes court appeal judgment' 26 February 2009

See Court of Appeal judgment on bank charge test case 26 February 2009 (pdf file 240 kb)

UTCCRs investigation and test case questions and answers page 19 June 2009

Download  Personal current accounts in the UK - Executive Summary of follow up report 7 October 2009 (pdf file 175 kb)

See press release 'Banks agree to make improvements to personal current account market in the UK' 7 October 2009

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Background information

See press release 'OFT announces 'quick fix' on bank charges will disadvantage consumers' 29 March 2007

See press release 'OFT launches market study into personal current accounts' 26 April 2007

Download reasons for market study 'Personal current accounts in the UK' April 2007 (pdf file 131 kb)

See  press release 'OFT launches test case on unauthorised overdraft charges' 26 July 2007

See  press release 'OFT files details of case against unauthorised overdraft charges' 31 August 2007

See Particulars of Claim 31 August 2007 (pdf file 55 kb)

See press release 'Statement: update on OFT test case' 15 October 2007

See amended Particulars of Claim 15 October 2007 (pdf file 278 kb)

See press release 'OFT publishes reply to banks defences' 15 November 2007

Download OFT's joint reply and defence to counterclaims 9 November 2007

See press release 'OFT test case on unauthorised overdraft charges-hearing commences in High Court' 14 January 2008

See press release 'OFT welcomes High Court ruling on unarranged overdraft charges' 24 April 2008

See press release 'The OFT issues a statement on Case Management Conference' 23 May 2008

Back to: Personal current accounts in the UK