Jeff Salway: New faces on the way, but expect the same old shoddy practices

Surely this is the shake-up the industry and its long-suffering patrons have longed for, energising a complacent market with products that meet customer needs and service that customers merit.

A ridiculous idea, sadly. There's more chance of Gordon Brown turning up at Murrayfield this afternoon with the saltire wrapped around his burdened shoulders, the thistle painted on to his face and a T-shirt bearing the legend Anyone But England.

Virgin has confirmed that it intends to charge what it promises will be a low monthly fee for its current accounts when its banking brand launches in 2011, or even later this year. The account will be the first with a compulsory fee for current accounts regardless of the amount deposited each month, unlike the fee-based accounts already on the market.

The move is designed to promote transparency, with no hidden fees and lower-than-average overdraft rates. The theme of transparency and clarity will be prominent as more new brands enter the banking market. Aside from Virgin, Tesco and, in London, Metro Bank, signs of new activity remain disappointingly scarce, but we can expect others to join the party soon enough.

An obvious candidate is M&S Money, owned by HSBC and already established in financial services as a major player in travel insurance and savings accounts.

But if the extent of innovation is to be limited to various permutations of fee-charging current accounts, how much better off will we be with an expanded current account market?

Fee-charging has been with us for some time in the guise of packaged accounts, held by 15 per cent of the adult population. Yet very few offer real value. Packaged accounts typically offer add-ons including car, motor and travel insurance and currency exchange services. Only rarely do the benefits justify the monthly fee, however, largely because only rarely do customers use all the extra services.

Mis-selling of the accounts is rife, with many people discovering only belatedly that they are forking out each month for services they neither want nor need. More often than not, the various extras not only work out as cheaper when bought separately but standalone products are also more likely to provide sufficient cover and meet individual needs.

Fee-based banking is already inevitable, despite the Supreme Court ruling last year that the Office of Fair Trading (OFT) could not investigate the fairness of overdraft charges, overturning earlier rulings in a test case that began in 2007.

However, the argument that fee-charging current accounts will represent a new era of transparency is wide of the mark.

Depressingly, it is difficult to envision the new wave of current account providers, should they materialise, bringing anything new to the high street. Even more depressingly, the model on which many people would like to see the next generation of banks based – building societies – is looking less attractive by the day.

News that the Coventry and Stroud & Swindon building societies are in merger talks means another mutual is set to disappear, along with the Chesham, Barnsley, Chelsea, Scarborough and Derbyshire, among others.

More will follow at a time when the customer-focused and traditionally safer (in most cases) building societies model should be held up as the way forward.

In reality, we can look forward to new names but the chances of getting anything but the same ropey ethics, the same inadequate products and the same shoddy service lie somewhere between slim and none.