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Press releases 2007 -

OFT launches market study into personal current accounts

67/07    26 April 2007

The OFT has today launched a market study into personal bank current account pricing, alongside a formal investigation into the fairness of charges for unauthorised overdrafts and returned items. The study will help the OFT consider the current level and incidence of the charges in the broader context of efficiency, transparency, value and consumer choice within personal current accounts. This will be the most wide-ranging study into personal banking to date.

Download reasons for market study (pdf 131 kb).

This follows the OFT's recent fact-finding exercise into unauthorised overdraft charges. The OFT shares public concern about the current level and incidence of charges, but believes any quick-fix solution might have unintended and far-reaching consequences across the sector and for consumers as a whole.

The wider study will examine:

  • whether the widespread provision of so-called free banking delivers sufficiently high levels of transparency and value for customers
  • the implications for competition and consumers if there were a shift away from the widespread provision of these type of current accounts, and
  • the fairness and impact on consumers of the incidence and level of unauthorised overdraft charges, in the context of other charges and any interest payments made for current account services.

John Fingleton, OFT Chief Executive, said:

'This market study will enable the OFT to consider wider questions about transparency and value in the provision of personal current accounts. This will provide the necessary context for assessing the fairness of unauthorised overdraft and returned item charge before we apply the law in this area. Our ultimate objective is a competitive retail banking market in which informed and active consumers drive strong competition and high levels of customer service among banks long-term, with minimum regulatory intervention.'


1. The OFT market study will be undertaken in consultation with industry, industry representatives and consumer advice bodies, as well as the Financial Services Authority (FSA), Financial Ombudsman Service (FOS) and Government.

2. In March the OFT announced an in-depth study of retail bank pricing. The initial review found the OFT shares the public concern about the level and incidence of bank current account charges, but it recognises that the application of the general principles it set out in 2006 to the banking industry is not straightforward.

3. OFT market studies are carried out under section 5 of the Enterprise Act 2002 (EA02) which allows a market-wide consideration of both competition and consumer issues. While the FSA is the lead regulator for UK banking, the EA02 enables the OFT to assess wider competition issues in a way not open to the FSA. The OFT sees strong benefits in carrying out both the market study and formal UTCCRs investigation, so that the market study can inform any action that may be taken.

4. In 2005/6, 90 per cent of households had a personal current account providing a gateway to other services and products.

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