British people are more likely to change their partner than their bank.

No wonder the Office of Fair Trading (OFT) found a "lack of dynamism" from the banks when faced with such inertia from customers in this £9 billion market.

Customers wanting current accounts face a dazzling frenzy of offers. It is no longer a case of a free clipboard or piggy bank. Switchers are lured with eye-catching offers like "£100 cash back" or "5% interest on balances". Whether such accounts offer good value after the opening offer expires is an entirely different matter. But customers find it difficult to compare accounts because of the different ways providers charge. (Borrowing £50 for three days can cost anything from £15 to £36.) As with the domestic energy market, price comparison websites can help, but those most in need of them are least likely to use them.

Loading article content

So, as the OFT observes, there is a lack of true competition in this market. In fact, despite two new entrants since 2010, 75% of all current accounts are shared between Lloyds, RBS, HSBC and Barclays. That is worse than in 2008 when the OFT last looked at this. Yet, once again it has fallen short of a referral to the Competition Commission. It is hard to understand why.

Though 80% of customers still use "free" bank accounts, average annual charges are around £140, only slightly lower than before the hoo-ha about unauthorised overdraft charges forced the banks to respond. In fact, they have merely compensated by jacking up charges and interest rates for authorised overdrafts. Free accounts are still a good deal for those who always stay in credit but they are effectively subsidised by those on tight budgets who cannot help going into the red sometimes.

Too many customers are lumbered with accounts they do not want or truly understand. They would shop around more if the prospect of switching was less daunting and cumbersome and if they could compare the true price of different accounts.

Two imminent changes may help a little: the sale of the RBS and Lloyds branches being forced by the European competition authorities and the new automated switching service being introduced in September in response to the Vickers Report. This should enable customers to switch accounts within seven working days at no cost.

However, more fundamental reform is needed. As Clive Maxwell, OFT chief executive, says: "Personal current accounts are critical to the efficient functioning of the UK economy." Despite this, his office will not be looking at this again until 2015. Meanwhile, the Coalition Government has let banks off the hook by permitting a delay until 2019 for ringfencing risky investments from vanilla banking. Yet in the meantime, the PPI and Libor-fixing scandals have further eroded trust.

No wonder increasing numbers are switching to credit unions and ethical banks. This is a wasted opportunity to kickstart the significant changes that are needed.