Free banking is a "dangerous myth", the executive director of the Bank of England has warned - and customers in credit should get used to the idea of having to pay for the service.
Now it is time for government to step in and end free banking for good, he suggested.
Andrew Bailey, who is likely to become the chief regulator of the financial services industry, said that customers don't currently realise they are paying to keep their money in banks.
Low interest rates on current accounts, and heavy overdraft fees, simple mask the true cost customers are already paying, he said.
In many other countries charges are imposed for banking, with those in Sweden in Italy levying the highest fees.
But banks on their own are unable - or unwilling - to end the "myth" because they will lose too much business, he said.
"It is hard for a single bank to break out of the existing situation without appearing to raise the price of its service to customers," he said in a speech to the Westminster Business Forum. "Even though it may not actually be raising the price as a whole.
"And, it is hard for the industry as a whole to break out without appearing to collude.
"So, it may require intervention in the public interest, not least because it is a way to encourage greater competition.
He added: "I don't think we will have a retail banking industry that is properly serving the interests of the public until we tackle the dangerous myth of free in-credit banking."
Free banking has also been criticised by Lord Turner, chair of the Financial Services Authority.
Bailey, who is expected to take over the new Prudential Regulation Authority to regulate British banks, also said the biggest problem facing the industry was the uncertainty in the eurozone.
He said: "Whatever happens in the euro area, there is a cost of adjustment, and that, too, will act as a drag on the returns earned by banks, and in the worst scenario presents a clear threat to financial stability."
The End Of Free Banking? The Reaction
The British Bankers' Association said it planned to hold talks with Bailey as part of its ongoing review of the issue.
Chief executive Angela Knight said: "As the industry's next chief regulator, Andrew Bailey will have chosen his words carefully.
"The UK is unique in its current free banking model: customers who keep their account in credit do not expect to pay anything extra for their normal banking services.
"In other countries, both in Europe and elsewhere, either customers pay a fixed amount each month or there is a levy depending on the number of transactions that they undertake, plus similar costs to the UK for additional services such as unarranged overdrafts."
Consumer Focus chief executive Mike O'Connor said: "The fact that banking isn't really free is one of our worst-kept secrets.
"Most people pay indirectly either through penalties or lost interest, depending on whether they are in the red or the black.
"There would be real value in establishing a more open and honest relationship between banks and their customers on what they get, how much it costs and whether others are offering better value for money.
"What must not happen is that consumers end up with the worst of both worlds - paying for accounts but still enduring unfair charges, opaque and complex products, mis-selling and poor customer service."