The Office of Fair Trading (OFT) has announced that banks have agreed to make current account costs more transparent, and the switching process more reliable for customers.

This follows the OFT 2008 market study which pinpointed three problem areas, including transparency for customers, difficulties over switching current accounts, and also the way in which unarranged overdrafts function, although a decision on this matter has yet to be made by the House of Lords.

Working with banks and consumer groups to identify ways to improve customer service, the OFT has now unveiled a number of measures to improve the situation.

For instance, to enable customers to better understand the costs of their account and compare it with what other providers can offer, banks have now agreed to introduce a number of measures, including making account charges prominent on statements, while also introducing an annual summary of the cost of each account.

Measures are also being taken to improve the switching process, by providing customers with a consumer guide and a website to increase awareness of the automatic switching process.

Commenting on the changes, 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 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.”

Meanwhile, Kevin Mountford, head of banking at moneysupermerket.com, hopes this will “enable consumers to make more informed decisions when comparing current accounts”.

“It’s vital that customers looking to compare current accounts consider the ways in which they will use the account before opting for any provider,” he said.

Lloyds Banking Group’s managing director, Peter Jackson has also pledged his support for the move.

“We are committed to improving transparency for all our current account customers and fully support the OFT’s transparency initiatives,” he commented.

“Lloyds Banking Group will be implementing all of the OFT’s recommendations including enhanced monthly information on statements and an annual summary to help all customers fully understand the charges and interest rates that have been applied to their accounts.”

© Fair Investment Company Ltd