Free current accounts could be culled

Office of Fair Trading calls to reduce penalty charges from £22 to £12, a rise to nearly a £1 billion in bad debt at each major bank and other losses are being blamed for the likely charge.

“[Banks] are also experiencing the need to tighten lending criteria as a result of burgeoning bad debts,” said Richard Mason, director at price comparison website moneysupermarket.com.

“The resulting impact will be further cost for the UK’s 31 million current account customers who are long-used to free banking.”

Although current accounts have largely remained free in the UK, banks are tightening their belts and lending criteria in a bid to reduce losses, despite a rise in profits.