Barclays was accused of confusing customers last week after it was revealed that the vast majority could be worse off following its move to “simplify” current accounts.

Consumer groups also said Britain’s third-biggest bank was using the overhaul to sell fee-charging current accounts by stealth. Andy Harris, head of current accounts, said last week the bank was looking to triple sales of its most-expensive account, Premier Life, which costs up to £25 a month. It also wants to sell a £14-a-month Additions Active account to one in four new customers.

The changes, which come into force in August, will benefit the 2m or so customers who frequently go into unauthorised overdraft. However, most of Barclays’ 11m customers who occasionally dip into authorised overdraft will lose out after the bank raised the interest charged by 2.3 points, from 15.6% to 17.9%. It will no longer offer interest-free overdrafts to new customers unless they pay a monthly fee.

Experts described the changes as a “body blow” to free banking after Barclays also scrapped interest on in-credit balances unless customers take out a fee-paying account.

The changes came as the Financial Ombudsman Service (FOS) reported a 30% rise in complaints last year. Disputes about banking tripled and there was a tenfold increase in complaints about overdraft charges, which are the subject of a High Court case between the banks and the Office of Fair Trading.

Analysts have warned that any attempt by the OFT to clamp down on overdraft charges will mean in effect the end of the free banking, and Barclays’ move is seen as the first step in that direction.

Following the changes, people who paid the maximum penalty for unauthorised overdrafts of £90 a month will only pay at most £88. However, someone who goes overdrawn occasionally could end up worse off.

While interest-free overdrafts will no longer be offered on fee-free accounts to new customers, existing customers will be able to continue with their existing arrangements.

Customers are being encouraged to move into two packaged accounts, Additions Active and Premier Life. Costing £14.50 and £25 a month respectively for those earning less than £60,000, they come with a £300 interest-free overdraft and a 9.9% rate on authorised overdraft transactions. Customers who earn over £60,000 will pay £17.50 a month for Premier Life, which has added benefits.

Samantha Owens of Moneyfacts, the financial data firm, said: “Barclays’ changes will not benefit the majority and appear to be a sneaky way to sell more packaged accounts — you will earn no interest unless you pay a fee.”

New customers who want to earn interest on in-credit balances can open a standard current account paying 3% on all balances, with a £300 interest-free overdraft for an annual fee of £36. The authorised overdraft rate is 17.9%.

We look at how the banks are fleecing you.

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