Sheffield firm blows the lid off dirty banking secret

Entrepreneur Alex Letts is offering people the choice to open a full current account with his company U, without the need to join a bank or building society.

The aim of the new U account is to prevent people paying unexpected bank charges in 'free if in credit accounts'.

Alex, who is based at the Electric Works, city centre, said: “For a number of years people have had the choice of not using a bank for credit cards, mortgages, and other sorts of loans and financial services.

“But you always had to come back to a bank for a current account to manage your core finances. As of now you no longer need to. This is the disruption the industry has been waiting for”.

The U account is completely digital and has no branches. Because it is not a bank, it does not lend money.

Rather than making its money from charging hefty fees for unauthorised overdrafts, U customers pay for the services they use, up to a maximum monthly fee of £10.

Its launch follows a Competition and Markets Authority report in August which revealed banks make £1.25 billion a year from hitting around 16 million customers - around 25 per cent of all personal current account customers - with unarranged overdraft charges.

Meanwhile new research from U which questioned 800 people around the UK reveals a quarter admit having as little as £1 left in their current account by payday and half said they had no savings at all.