Britain’s banks have today bowed to pressure from the Office of Fair Trading (OFT) and agreed to make their current account charges more transparent. They have also promised to make it easier for customers to switch from one bank to another.

Their decision follows publication of the OFT’s latest study into the £8 billion market, which highlighted three problem areas: lack of clarity over charges, difficulty in switching banks and concern over the way banks charged for unauthorised overdrafts. The OFT said the existing system did not work well for consumers.

To improve clarity over their charges banks have undertaken to provide an annual summary of the cost of their account for each customer. This is designed to help customers work out if they are getting value for money. Banks have also agreed to make charges prominent on monthly statements, provide average credit and debit balances, which will help consumers to assess the possible benefits of switching banks, and provide a range of illustrative overdraft charges for different scenarios.

In order to smooth the switching process banks will be acting to minimise any problems arising from transfer of direct debits. they are also putting together a new consumer guide and website to improve awareness of the automatic switching process.

Work is still continuing on unauthorised overdraft charges. The OFT is conducting a separate investigation into the fairness of the existing system.

John Fingleton, OFT chief executive, said: “We welcome the industry’s commitment to these important steps to improve the working of the current account market. As consumers become more aware of the costs of their current account and more confident in switching as a means to get better value, so banks will need to offer more competitive and innovative products ancd services to attract as well as retain customers.”