Calling banks' bluff
The Office of Fair Trading is calling the bluff of the big banks.
They've threatened to end "free banking" if they are banned from levying stiff penalty charges on those who breach overdraft limits - which could result from an investigation by the OFT currently in progress.
That sounds like the kind of threat which could damage the standing and popularity of the competition watchdog. So it has today bitten back by launching a "market study" which will examine just how free "free banking" really is.
You can tell that the OFT doesn't think it is very free: its formal announcement this morning refers to "so-called free banking".
I wrote recently about the substantial charges levied by banks when we use plastic abroad. The point I made then was how difficult it is to work out what the banks charge us for that service: the way they charge is complex and the information they often provide is baffling.
And as John Fingleton, the director general at the OFT, pointed out this morning, there are hidden charges for millions of people who keep their current accounts in credit but receive next-to-no interest payment.
Now there have been plenty of studies allegedly proving that we receive the best value banking services in the world. That may be true. But we are also blessed with some of the most profitable banks in the world.
The question therefore is whether there is sufficient competition between our banks in the provision of current account services.
If you think there is, ask yourself the following question: what in aggregate in a typical year do you pay your bank for your current account? In order to know that you would have to calculate the interest you forgo on credit balances that pay zero or low interest, you would have to calculate the loss to you from money due to you but held in the banks' transmission system, and you would then have to add in overdraft charges, penalty charges, charges for using plastic abroad, charges for buying currency in the UK and so on.
Unless you can answer that question, and I will bet that most of you can't, how on earth can you shop around for a better service? Without greater clarity about what we pay our banks, genuine competition that would benefit us all will never flourish.