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.
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."