Banks will also be forced to alert customers when they face unarranged overdraft charges and offer a grace period to allow them to avoid being stung. There were no measures to end Britain’s system of free banking for customers in credit, which Post Office Money said means paying “unclear, excessive fees” on other services and is a barrier to innovation by challengers.

Shares in the big banks rose following publication of the CMA’s report but PwC said the watchdog's bid to unleash a revolution in mobile banking could prove costly. It also suggested the issue of capital requirements for challengers could yet be revisited by the Prudential Regulation Authority, the Bank of England and the Treasury.

The British Bankers’ Association, which represents big banks and challengers, said that it recognised “more work needs to be done to create a level playing field by supporting new banks wanting to set up business, as well as helping to grow established banks”.

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