Every so often, free current account banking seems in jeopardy. The latest threat to its survival derives from this week's Office of Fair Trading report into credit card charges for overdue payments. Banks and credit card issuers were unimpressed by the conclusion that these charges were unfairly high, but at least they had expected it. What led to warnings about the possible death of free banking was the OFT's view that the same approach, of setting charges at levels aimed just at recovering reasonable costs, should apply to current account penalty charges, such as those for bounced cheques or exceeding agreed overdraft limits.

In principle, charges should be transparent and relevant. Late payers should not be unfairly penalised, but consumers in general should not subsidise them. The OFT makes a case for a penalty charge of £12 and says anything above this could face legal challenge. The banks and card issuers should not simply accept this. The logic of their often-stated view that the current levels of charges - typically £25 - are lawful is that they should be prepared to see the OFT in court.