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The Consumer Focus watchdog has called for an Office of Fair Trading (OFT) investigation into the use of temporary headline interest rates to attract savers to cash Isas.

Tax-free Individual Savings Accounts (Isas) were introduced in the UK 11 years ago to encourage people to save. The average interest rate stands at 0.41%, Consumer Focus said, with many banks and building societies “baiting” customers with short-term higher rates.

Consumer Focus believes that savers are missing out on interest of up to £3bn of interest a year, partly because it is difficult to switch providers. The Office of Fair Trading (OFT) must now consider the complaint, and give a response within the next 90 days.

About 37% of UK households have a cash Isa. A significant proportion of those hold as much as is allowed in these accounts. In April, the amount people can save in an Isa every year will rise from £7,200 to £10,200, of which half can be saved in cash and half, or all, in stocks and shares.

The end of the financial year usually brings a so-called “Isa season” with high levels of marketing by the various providers. But Consumer Focus said that some offered eye-catching rates of more than 3% which dropped after a year to uncompetitive levels.

It is certainly true that at less than 0.5% interest the average Isa saver is getting a poor deal. And while people could switch to one of the 3% deals on offer, many are put off by the cumbersome transfer process.

Consumer Focus points out the evidence that very few people do actually switch their accounts. It is almost unbelievable that in 21st century Britain it takes a month to transfer information and funds from one bank to another.

The British Banking Association has leapt to the defence of its members, unsurprisingly their spokesman does not believe that there is any reason for concern.

From May customers will be given advanced notification of any reduction in the interest rate on a cash ISA, plus advance notice of the end of any bonus or introductory rate. This seems like it should be standard procedure, not a last minute concession in the face of a potential investigation but we should be thankful for small mercies.

As with any banking product, the advice with Isas is clear, shop around, compare as many products as possible before making a decision, after all its hardly rocket science to find a good deal these days. Then read all the small print and read the statements to make sure you are still getting the rate of interest that you think you are.

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An interesting and mostly unnoticed section of yesterday’s budget set a precedent by legally obliging banks to provide a basic bank account to everyone.

The move was one of several imposed by the chancellor supposed to improve the way banks do business after years of unprecedented criticism of the sector. The other changes included new targets for lending, with the threat of curbs on pay if they are not met.

According to the Treasury, there are 1.75 million adults in the UK without access to a bank account. The universal banking pledge is aimed at helping these people acquire the first requisite of financial stability.

The basic accounts in question allow customers to receive pension and benefit payments, provide a debit card and let people set up direct debits. However, they do not offer overdrafts and usually do not let people have cheque books.

The British Bankers’ Association has immediately responded by saying that the move is unnecessary because just about everyone can, in any case, have a bank account if they want one.

They seem to be missing the point though. A universal banking pledge is aimed at everyone. ‘Just about everyone’, by the very nature of the term, does not include everyone.

The Budget also said it would promote banking competition by speeding up the licensing process for new entrants. By reducing one of the main barriers to entry to the banking market, the government has ensured that it can more easily remain competitive which is better for the consumer.

The promise to move faster when deciding whether to grant a new banking licence was welcomed by the consumers’ organisation, Which? in a statement. “New entrants in the market offering genuinely competitive products will help bring about the culture change the industry so desperately needs.”

Ordinarily I am against excessive regulation of the markets but the UK banking sector is one area where market failure is clearly occurring and regulation is often the best way to fix it.

As the market becomes more competitive I would hope the need for regulation decreases, but until then the restrictive practices of the small number of very large high street banks in the UK will need constant vigilance.