Andrew Bailey, executive director of the Bank of England and chief executive-elect of the Prudential Regulatory Authority, said Britain's financial regulators are considering intervening to end the UK’s 28-year old practice to stamp out damaging mis-selling scandals and improve the treatment of customers.
He told the Westminster Business Forum that free banking was a “myth” that “encouraged the mis-selling” of products such as payment protection insurance, which has cost the industry billions in customer compensation.
“Reform of retail banking in this country cannot move ahead unless we tackle the issue of free in-credit banking, and have a much better sense of what we are paying for and how we are paying,” he said.
Britain is one of the few countries in the world where customers do not pay a fee for their current account. Instead the banks claw back the bulk of the cost of providing branches, online services, and cash machines through punitive fines on customers who go over their overdraft limit or bounce a check.
Only India and Australia operate current account models like the UK.