The Office of Fair Trading decision to take banks to task over charges threatens to overturn the way that current accounts have worked for decades.

Customers who manage their accounts badly are penalised so heavily that the rest of us have free banking. At first glance, this seems fair. Why should a “good” customer pay for the profligacy of someone who slips into the red? But there is a catch. The charges are harshly punitive and tend to fall with disproportionate frequency on lower-earners. Citizens Advice reports a case where a low-earner slipped 20p into the red and charges levied on charges sent his bill spiralling to £300. Bailiffs were called in. This is not an isolated case.

Banks make an estimated £4.7 billion a year out of charges and penalties, according to the consumer group Which? The OFT investigation is likely to mean an end to these high charging structures, and therefore an end to free banking. If the banks cannot recoup their costs though penalising the few, they will charge the many. The pressure is on from the banks’ shareholders to keep producing bumper profits. We should not be too quick to decry these profits, as the shareholders who benefit include our pension funds and investment plans.

But free banking is an illusion. The OFT hinted that it took this view in its announcement, which referred to “so-called free banking”. The banks are not charities and they provide a service for which someone has to pay. The argument is now about who pays. The OFT appears to be leaning towards the view that transparent and fair pricing will involve all of us paying for our banking. There will be strong resentment to this position from those who think that banking should be the exception to the rule that you never get something for nothing. But if you are a “good” customer reluctant to pay £5 a month for the running of your account, ask yourself if it is fair that banks are requiring – in such an underhand and morally dubious way – low-earners to subsidise you.