The current account is the most prevalent kind of bank account in the UK. According to a report by the OFT, called Review of barriers to entry, expansion and exit in retail banking, 93% of adults in the UK hold at least one current account. While consumer review websites are full of consumer complaints against banks, account holders rarely try to switch accounts. Before the Current Account Switching Service launched in September 2013, the difficulty involved in switching current accounts could have easily accounted for the lack of consumer interest in the activity.

Now that switches easily go through in 7 days under the new system, what could explain consumer reluctance to switch? A report by the Treasury Committee may have a clue - current accounts are advertised in such a confusing and opaque way that consumers have no way of identifying deals that are better than what they have.

The barrier of confusion

When consumers need to compare different current accounts for their overdraft policies, they lose their way navigating confusing terminology. For instance, some accounts advertise interest-free overdrafts. While consumers may take the term "interest-free" to mean that they are free, banks using this term mean that they charge their customers through flat daily fees, rather than an interest rate.

Many banks advertise their basic accounts as "free banking" accounts and market them at low income consumers. Consumers holding these accounts, though, pay an average of £150 each year operating these accounts. They pay in the form of overdraft fees and other penalties.

The lack of clarity can be so serious that people often turn to payday loans that charge a clear 5,000% APR rather than risk making use of a current account overdraft that is unclear about what exactly it charges (in reality, some banks charge their current account holders overdraft interest rates that are far higher than what payday lenders charge).

Even when banks try to publish details about their current accounts in easy-to-understand terms, the sheer volume of the choice available - different account plans, overdraft plans and interest rate plans - can take away any benefit that the clarity may bring.

The barrier presented by inadequate choice

Three-quarters of the UK retail banking market is locked up by just four major banks. Many critics of the British banking system consider the banking system an oligopoly - a market that features poor competition because it's owned by just a handful of giant businesses. With little competition to worry about, the large banks have no incentive to advertise their products properly or to explain to consumers how their plans are different from what the competition offers.

The lack of options is clear in the way consumers carry out their banking activities. Reports by consumer organizations find that half of all people applying for home loans or personal loans go directly to the bank that they have their main current account with. They don't believe that they have real choice.

What should consumers do?

Consumer groups have various ideas on what can be done to encourage consumers to actively look for alternatives and switch current accounts. Some have suggested that banks should send their account holders annual statements that help them see exactly how much they pay in fees, interest and penalties. Every bank could be required to advertise its offerings in the same format to allow easy comparison.

Until banks make their product offerings easier to understand, consumers should view choosing banking services the way they would any technical matter. Just as they would turn to expert reviews and recommendations for help choosing mutual funds or stocks, they should turn to trusted expert recommendations for help finding the best bank account deals.

When experts make recommendations, they aren't usually taken in by simple myths the way regular consumers are. For instance, experts are more likely to give small banks like Handelsbank and Metro Bank a chance because they are able to study their background, the management teams behind them and the policies they use. Regular consumers, on the other hand, are likely to dismiss these banks as too new and untested. These banks offer consumers real choice - transparent fee schedules, more generous overdraft rates and better interest rates.