Banks are still not doing enough to help consumers find the best deals in the current account market, the Office of Fair Trading (OFT) has said.
Despite ongoing efforts to reform the sector, the OFT said comparing the costs of current accounts continues to be challenging and that people lack confidence in the switching process.
The watchdog has made a number of new recommendations but said it is minded not to refer the sector to the Competition Commission for further investigation, although it will revisit the issue in two years time.
OFT chief executive Clive Maxwell said: "Personal current accounts are critical to the efficient functioning of the UK economy. Despite some improvements, this market is still not serving consumers as well as it should."
The OFT said that since it last looked into current accounts in 2008, the major banks have increased their share of the market, entry by new competitors remains infrequent and consumers still only rarely switch providers.
And while people have saved up to £928 million a year from the fall in unauthorised overdraft charges between 2007 and 2011, the OFT said overdraft charging structures remain too complex.
It noted that text alerts were helping consumers avoid unauthorised charges, but it wants banks and building societies to do more to promote this service. There has also been encouraging feedback on the use of annual account summaries which detail what people have paid for their service and provide scenarios so customers know what they will pay if they exceed agreed limits.
The OFT said they would be of greater value if consumers had more consistent access to them. In terms of switching, the OFT said it would ask the Payments Council to look into the costs of enabling customers to transfer their bank account number.
The OFT hopes competition will improve with the sale of branches from both Lloyds Banking Group and Royal Bank of Scotland, while a new £750 million automated account switching service is due to be launched in September.
British Bankers' Association chief executive Anthony Browne said: "We welcome the OFT's decision not to refer this issue to the Competition Commission and will continue to work with them to make further improvements for customers and the wider economy."