Up to half of the profits made by big banks from current accounts come from just one in 10 customers, according to the industry regulator. Customers with overdrafts, which are more profitable than other types of credit, are particularly lucrative. A report by the Financial Conduct Authority (FCA) said banks were also benefiting from customers taking loans and credit cards with the same bank. FCA boss Andrew Bailey said: "There is no such thing as free banking". The FCA said that the main High Street banks had a captive audience of customers who did not switch and who were targeted for cross-selling of other products. These major banks, despite the emergence of more challenger banks, still had control of more than 80% of the personal current account market.

he regulator found that banks were making profits from customers who held money in accounts that paid little or no interest. Those with high balances were particularly lucrative for the banks. Often, loyal customers have savings and current accounts at the same bank, instead of seeking out better interest rates for their savings. As a result, they were receiving interest between 30% and 50% lower than they could generate elsewhere, the FCA found. About half of customers who had a credit card and a current account used the same bank for both, and a similar proportion had a loan with the same bank - even though these might not offer the best deals.

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