Even without the merger of Lloyds TSB and HBOS, there are already serious questions about competition in retail banking and whether consumers are getting a fair deal.

To address these problems, we recently launched our We Own the Banks campaign, calling on the Chancellor to order an independent inquiry into UK banking with a view to implementing long-term reforms that would shake up retail banking, particularly the current account market.

The OFT's market study published in the summer backed up what we at Which? have been saying for some time - that real competition between banks is limited, people don't know how much they pay for their current accounts and, as a result, there is very little switching between providers.

Markets work best when consumers are well informed about the products they are purchasing and companies are genuinely incentivised to compete for new business on the basis of transparent products that perform in the marketplace.

Sadly, this hasn't been the case with the current account market for some time and there is a real danger that the Lloyds TSB/HBOS merger will compound the situation.

The first step is transparency. Banking in the UK is not free, and nor should it be, but the reality is that people do not understand how they pay for their accounts - whether through unfairly high charges for unauthorised overdrafts, or through the billions of pounds banks generate by offering miserly interest rates to their customers in credit.

An annual summary of charges and interest, and an annual reminder of a customer's right to close their account and switch would make people aware of how much they actually pay for their accounts. This would make comparing accounts easier and encourage switching between providers, improving competition by forcing banks to demonstrate why their product or service is the best.

A further innovation we would like to see is to include a customer's average balance over the preceding month and year on their monthly statement.

Making this information available would allow anyone to assess how they are being rewarded for their credit balances and could greatly increase the ability of the individual to shop around. It would allow the creation of comparison tables to facilitate switching and would crucially create a means to allow people to assess the benefits of one account over another.

The introduction of portable account numbers would make it easier to switch and to stop people's No1 fear of their direct debits going astray during the process. This fear is recognised in the OFT study.

The Which? current accounts survey of our members in 2008 found 20 per cent of those who had switched had problems with the companies that their direct debits were set up with. Portable account numbers would address this problem.

While the merger of Lloyds TSB with HBOS may be necessary for short-term stability, the Government must take measures to ensure that it does not have a detrimental and long-lasting impact on competition. What's more, radical reforms are needed to build a strong and fair market with consumer interests at its heart.

Peter Vicary-Smith is the chief executive of Which?
www.which.co.uk/emaildarling

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax