'The bank my father used...'

By Yvette Shapiro BBC Northern Ireland business correspondent

When it comes to personal finance, we're a conservative lot.

Despite the ever-growing number of banks, building societies and other finance companies competing for our business in Northern Ireland, 75% of all personal current accounts are still held with the four main local banks: Northern, Ulster, First Trust and Bank of Ireland.

'When it comes to finance, we're conservative'

That's a huge chunk of a market estimated to be worth £2bn.

Many thousands of people continue to pay their way using the account they opened as a teenager with their first pay cheque. And that was, more than likely, the bank that their parents used.

Consumers felt comfortable with the safest and most familiar option, but in many cases, it's been proved that they were paying through the nose for the privilege.

In 2004, the Consumer Council for Northern Ireland carried out some research into the current account market locally and found high levels of customer confusion over charges.

They also discovered that people were highly reluctant to switch providers, even when they'd had a bad experience at the hands of their bank.

In collaboration with the consumer group Which, the Consumer Council brought a so-called "super-complaint" to the Office of Fair Trading.

It found grounds for concern and, in May 2005, referred the issue to the powerful Competition Commission. Now the banks were really under the microscope.

The commission doesn't work quickly, but it is thorough. Within a year, its initial findings made uncomfortable reading for the banks.

The inquiry found a lack of clarity on charges, unduly complex charging structures and a marked reluctance by customers to switch banks. This, said the commission, resulted in a market where competition was restricted.

New measures should put paid to confusion

And this was the stark reality for thousands of us: according to the report, customers here were incurring higher charges and receiving lower interest that they might expect in a more competitive market.

In March this year, the commission published the proposed remedies which the banks would have to adopt.

These included the provision of easy-to-understand descriptions of account services; clear explanations on the levels of charges and interest rates, along with how and when they would be imposed; annual summaries of charges, and at least two weeks' notice that charges would be deducted from an account.

The commission also gave notice that it would demand that banks should make it easier for customers to switch providers.

In future, it said, institutions should offer new customers a charge-free and interest-free overdraft facility for at least three months, to allow time for the switching process to take effect.

These measures will take effect from next year - failure to comply is not an option for the banks. They'll face High Court injunctions or heavy fines if they don't adopt the remedies.

Many have already made significant changes to their personal current accounts during the life of the inquiry.

Some were faster to act than others. Indeed, several new products have been launched in the past few weeks, just ahead of the final report from the commission.

Today marks the start of a customer revolution in banking. The market is being transformed from being cosy and complacent for banks to being competitive and customer-focused Steve Costello Consumer Council Have your say: Rip-off NI?

First Trust introduced its new fee-free Plus account earlier this month, while Bank of Ireland and Ulster Bank are both trumpeting "easy-switch" services, setting up dedicated switching teams and allowing customers to make the move by phone or online.

The Ulster is even offering a £150 cash windfall to attract "switchers".

What a difference an inquiry makes.

"There has been more change in the banking market here in the last three years than in the last 30 years," said Consumer Council chairman Steve Costello.

"Today marks the start of a customer revolution in banking. The market is being transformed from being cosy and complacent for banks to being competitive and customer-focused.

"We believe that the outcome of our super-complaint and the subsequent investigation by the Competition Commission is arguably the single biggest consumer victory of our time."

The council urged customers to take control of their bank accounts and seek out the best deals. Customer inaction is still a major problem, according to the chairman of the Competition Commission, Christopher Clarke.

"Almost 20% of customers remain on 'traditional' accounts and continue to pay a complex array of fees and charges when in authorised overdraft," he said.

"Customers have a critical role to play to help themselves. For them to gain full advantage from these measures, they need to be pro-active in seeking the best account to match their own personal circumstances."

And while the commission may have finished its inquiry, the pressure is still on for the banks. The Office of Fair Trading is carrying out a UK-wide survey of current account pricing - that's the actual level of the fees paid - and there's also an ongoing review of the banking code.

Christopher Clarke says his report is being closely examined by the officials behind both of these investigations and it seems more than likely that many of the measures imposed on the local banks will have far-reaching implications for all banks operating in the UK.