The investigation concluded that consumers are faced with complex overdraft charges and limited information on product and service quality, which, along with limited effective comparison tools, makes it very difficult for customers to know what they are paying and to compare banks and products.
Bank customers fear that switching their current account to a new bank will be complicated, time-consuming and risky. Only 3% of customers switched their PCA in 2014 and just 16% looked at alternative accounts.
The investigation also discovered that accounts which are more expensive and below average quality are not losing customers to cheaper and better alternatives at the rate that would be expected in a well-functioning market.
Alasdair Smith, Chairman of the retail banking investigation, said:
"Banking is a sector of huge importance that affects every household and business in the country. We think customers need to be put in charge of their banking.
"There have been long-standing concerns about the retail banking market, where many customers could save money and get better services by switching accounts. This investigation was an opportunity to take a detailed and independent look at the sector.
"Despite some encouraging developments, particularly in the shape of challengers that have entered the market in recent years, for too long banks have been able to sit back and take their existing customers for granted."
