British banks’ practice of offering free current or checking accounts for customers in credit is unsustainable and heightens the risk of future mis-selling scandals, according to a report by PricewaterhouseCoopers (PwC).
According to the report titled "There is no such thing as a free lunch", the free banking model endorsed by banks like Lloyds and Barclays hinders competition and makes it difficult for new entrants to cast their presence in the market.
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The research based on a survey of 2,000 bank customers found two-thirds of them to be not willing to pay up front for a current account.
PwC retail banking leader Steve Davies said: "UK current accounts are not free at all and are paid for through overdraft charges, penalty fees and uncompetitive or zero rates of interest.
"A more sustainable approach is customers pay a fair price in return for reasonable services, which would reduce the risk of banks seeking to recover costs."
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