The UK trading watchdog stepped up the pressure on banks today by launching a review into the personal current account market.
This comes amid concerns over a lack of transparency and competition.
The Office of Fair Trading (OFT) warned it could take "radical" action if the sector cannot show it is becoming more competitive and consumer focused.
The UK watchdog wants banks to make switching easier and increase their transparency over fees and charges.
It said it will consider going to the Competition Commission if it finds the sector has not done enough to pull its socks up.
Today's launch is confirmation of an announcement made in 2010 that the OFT planned to launch a review into the sector this year.
The body said it has not deliberately timed the review to coincide with recent customer outrage over banks' behaviour, although it comes as comparison websites and building societies are reporting a surge in customers looking to switch deals, following NatWest's IT meltdown and Barclays' Libor-fixing scandal.
The Financial Ombudsman Service in Britain said current accounts are one of its most complained-about financial products, attracting 15,000 new complaints last year. So far this year, over 15,000 inquiries have been made to its frontline helpdesk, and the ombudsman received 3,543 new cases between April and June.
Complaints to the ombudsman have fallen from a record high in 2007/08, due to a drop in complaints about the legality of bank charges, but the ombudsman said it still regularly deals with complaints including disputed transactions, financial hardship and debt, packaged accounts and delays in switching accounts.
The OFT will ask customers about their recent experiences as well as speaking to banks and trade bodies during the review, which forms part of a wider drive to make the banking sector more focused on the consumer.
The OFT wants providers to make sure customers are being given the right information to make informed choices about which products they should choose.
It wants to shake up competition, with credible new players able to join the market more easily, giving customers more choice, with "challenger" banks and new technology providing more scope to compete.
"If we do not see real change from banks over the course of this programme of work, then a more radical approach may be considered," the OFT warned. The watchdog said it was possible it could decide to go to the Competition Commission, if the right conditions are met.
The Independent Commission on Banking recommended in September last year that the OFT consider making a market investigation reference to the Commission by 2015 if not enough improvements in the market have been made.
The move is likely to add further fuel to the debate about fee-free banking, with mounting arguments that banks would be less inclined to impose hidden charges and mis-sell products if a regular fee on current accounts was already in place.
Lenders are in the process of paying up to £9 billion sterling in compensation after a widespread scandal involving the mis-selling of payment protection insurance was uncovered.
This review follows a report from the OFT in 2008 which found a "complexity and lack of control" over unarranged overdraft charges, low levels of transparency of charges and other costs, and problems with switching providers.