Banks agree to make costs transparent

| October 7, 2009 | 0 Comments
”Banks

An investigation by the Office of Fair Trading (OFT) found that consumers struggle to understand current account charges, as well as interest rates and overdraft fees.

As a result, new measures from 2011 will see banks make it easier for consumers to understand their costs and charges, as well as making the switching process easier.

This means it will be simpler to transfer direct debit payments from an old account to a new one. OFT found that many consumers are deterred from switching accounts because of the problems it causes.

The OFT investigation found that just 6% of customers had switched current accounts in the last year - one of the lowest switching rates in Europe.

In addition, the consumer watchdog is to launch an interest calculator on the Consumer Direct website, which it says will help consumers understand and compare the costs of their bank accounts.

Commenting on the new measures, OFT chief executive John Fingleton, said: “As consumers become more aware of the costs of their account and more confident in switching as a means to get better value.”

“Banks will need to offer more competitive and innovative products and services to attract as well as retain customers,” added Mr Fingleton.

From 2011, customers will receive an annual summary of account costs, which will also highlight charges on monthly statements.

Consumer Affairs Minister Kevin Brennan described the new measures as “a step in the right direction”.

“People deserve an upfront and clear service from their bank and these measures are an important part in delivering that,” added Mr Brennan.

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