Parliamentary inquiry to look at whether bank customers should pay for accounts - Telegraph.co.uk

Andrew Tyrie, a Conservative MP and chairman of the Treasury Select Committee, has been appointed to chair the Commission. Mr Tyrie has been a frequent advocate of ending free banking, which he has described as a "myth".

Lord McFall, the Labour former chairman of the Treasury Committee, and the former Conservative chancellor Lord Lawson have agreed to sit on the Commission.

The establishment of the Commission proved controversial after Labour argued that the Government should set up a judge-led inquiry to investigate banks in the style of the Leveson Inquiry into media ethics.

There was also controversy as John Mann, a Labour member of the Treasury Committee, complained that he and Andrea Leadsom, a Conservative MP, had not been invited to join the Commission. He has said he will run his own separate inquiry.

"Both Andrea and I were available for the inquiry and because we are too outspoken we have been blocked. This exposes the inquiry as a total whitewash, with Andrew Tyrie reaching his conclusions in advance of the meetings," said Mr Mann.

Last month, Lord Turner, chairman of the Financial Services Authority, launched his own attack on free banking, saying it represented a flawed system and was the "central problem" in the British current account market.

"One important barrier to competitive entry into UK personal sector banking is obvious – the fact that the core product, the current account, is usually given away for free, sold at below cost of production," he said. "It is not a sound basis for a long-term trust-based relationship between a competitive banking system and its customers," he added.

In May, Andrew Bailey, executive director of the Bank of England and chief executive-elect of the Prudential Regulatory Authority, said he was in favour of banks applying a £15 monthly charge to all current accounts.

"It may require intervention in the public interest, not least because it is a way to encourage greater competition," said Mr Bailey, as he warned that the authorities may have to push banks to introduce the charge to avoid the appearance that banks were colluding.

Many banks, including HSBC and Royal Bank of Scotland, have already begun offering paid-for accounts that offer customers premium services, in an effort to get more people to give up free accounts.

Santander is also among those banks keen to encourage customers to begin paying for current accounts and is expected to focus its evidence to the Commission on the disadvantages inherent in the existing banking system.

The Commission comes in the wake of several recent banking scandals. On Saturday, a Treasury Committee report criticised several senior bankers and regulators over their handling of Libor, with Bob Diamond, the former chief executive of Barclays, accused of being "unforthcoming" in his public evidence to MPs.