The UK's Office of Fair Trading is working with payments processor Bacs on steps to improve account switching for consumers as part of a raft of measures designed to inject more competition into the market for current accounts.
The move follows a 2008 study by the watchdog into the £8 billion current account market in the UK. It identified three major problem areas relating to transparency of cost to consumers, "real and perceived difficulties over switching", and crippling overdraft charges.
Following consultations with banks and consumer groups, the OFT says the industry has agreed to introduce an annual summary of the cost of their account for each customer and to provide more information on charging patterns that will help consumers to estimate the potential benefits of switching bank.
The OFT says it is also taking steps to help consumers understand and compare the costs of their accounts through new advice and tools, including an interest calculator, on its Consumer Direct website.
To improve the switching process, the OFT says Bacs has agreed to upgrade functionality for transferring direct debits from bank to bank and provide a new consumer guide and Website as part of an effort to increase consumer awareness of the automatic switching process.
Work on unarranged overdraft charges is currently on hold, as the OFT and industry await the outcome of an ongoing Supreme Court case into bank fees.
John Fingleton, OFT chief says: "As consumers become more aware of the costs of their account and more confident in switching as a means to get better value, so banks will need to offer more competitive and innovative products and services to attract as well as retain customers.
'However, the third problem area we identified - unarranged overdraft charges - still needs to be resolved for the market to work in the best interests of bank customers.'