......warns top financial watchdog

The United Kingdom should kick its habit of free banking so that the big High Street banks stop squeezing profits out of their customers elsewhere - that was the message from the country's top regulator today. Britain's bank customers could soon be paying for their current accounts as standard, after the chairman of the Financial Services Authority warned that free current accounts for those in credit are harming competition among High Street banks and leading to mis-selling. Lord Adair Turner suggested banking was 'at a cross-roads' in a speech in London today. His words carry extra weight as Lord Turner is among the front-runners to head a beefed-up Bank of England after the current governor Sir Mervyn King steps down.During a gloomy assessment of the UK banking sector, Lord Turner said: 'We need to recognise a central problem in UK retail banking – the impact on competition of free-if-in-credit banking.'

He described how current accounts for those in credit with their bank were effectively being 'given away for free', even or sold below cost of production. The major banks have only been able to do this by cross-selling other products to customers. This makes it difficult for new banks to enter the market and compete with the traditional giants, Lord Turner said, adding that the need to claw back costs from free banking could indirectly lead to poor value products and mis-selling.....Read more here: We-need-accept-free-banking-central-problem-FSA-chairman-Turner-warns.html