Major banks are squeezing money out of customers who sign up for 'free' personal current accounts, the city watchdog has warned.

The Financial Conduct Authority said consumers are foregoing money they could have received by getting a better deal elsewhere, and can end up paying more in charges than they could have paid if they had shopped around.

This can include paying high overdraft fees, or even cutting interest rates for those who keep their accounts in credit, the FCA said, and helps to contribute to the profit of major banks

It said that major banks have a "captive audience" of personal current account holders who also end up being cross-sold other products, such as credit cards and loans, due to their reluctance to swtich.

Andrew Bailey, FCA chief executive, went as far as saying "there is no such thing as free banking".