Banks will be forced to come clean on fees

The Competition Commission said it also wanted to make it easier for customers to switch banks.

Campaigners said the shake-up heralded "arguably the biggest consumer victory of our time".

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Banks would be required to spell out all charges on monthly statements and again in an annual summary.

They will have to give 14 days' notice of any fees, allowing clients to challenge charges that are wrong or unfair.

Banks will have to inform customers that they can switch to a rival and win compensation if the transfer is bungled.

The hidden charges imposed by

banks have been highlighted by the Daily Mail's Fair Play on Charges campaign which was launched in 2005.

More than one million customers have claimed refunds over unfair overdraft fees and other penalties.

The campaign for compensation suffered a setback yesterday when a Birmingham judge appeared to side with the banks in the dispute over charges. An appeal is expected however.

The Commission's plan is the most far-reaching reform of the way banks run current accounts in a generation.

It could break the stranglehold enjoyed by the big five, HSBC, RBS-NatWest, Barclays, Lloydstransactions-TSB and Halifax-BoS. Most adults are still more likely to get divorced than change their bank account.

Critics say this allows banks to take advantage through the sale of expensive financial products such as credit cards, insurance cover and loans.

The giants have also been able to develop a complex array of hidden charges and penalties that many find difficult to understand.

The Commission believes its proposals will make it much easier to shop around for the best deal. Customers would be able to make comparisons and switch banks as easily as changing to a new power supplier.

The proposals follow an inquiry into the high street banks in Northern Ireland.

But the Commission has made clear that it expects its recommendations to be written into the Banking Code which covers all UK customers. The measures would come into force as early as next year.

The legally enforceable ruling represents the culmination of a "super complaint" against the banks taken by the Consumer Council for Northern Ireland and supported by Which?.

Stephen Costello, the council's chairman, said the measures would fundamentally shift power from banks to customers.

"Today marks the start of a customer-driven cultural revolution in the banking market,' he said.

"We believe that the outcome is arguably the single biggest consumer victory of our time.

"All customers are going to end up with a better deal because of better competition, better innovation, lower charges."

Christopher Clarke, who chaired the inquiry, said: "An increase in switching bank accounts, or an increase in the possibility of doing so, will incentivise banks to provide better terms and clearer conditions.

"Customers deserve better treatment which our remedies are designed to provide."

The shake-up is likely to see the banks start charging up front for current accounts, with monthly fees replacing hidden charges.

The fees might cover a right to a certain number of electronic such as direct debitsor cash machine withdrawals. The British Bankers' Association said last night that the proposals went too far.

Chief executive Angela Knight said: "Banks are happy to provide customers with easy to understand information and to help them make appropriate financial choices.

"We fully support customer access to information but wonder whether more information will really help target those customers who are not in the habit of reading their statements in the first place.

"We are happy to work with the Competition Commission on wording to advise customers of their rights to switch accounts but remain of the view that this goes further than models in other industries."