UPDATE 1-More changes needed in UK chequing accounts - OFT

LONDON, Jan 25 (Reuters) - British banks should simplifycharges for overdrafts to help make the chequing account marketmore competitive by allowing people to decide easily who offeredbest value, Britain's consumer watchdog said.

The Office of Fair Trading held back from involving theCompetition Commission because of a new, easieraccount-switching service coming in September and with Lloyds and Royal Bank of Scotland set to sellbranches.

The OFT said on Friday its review of the 9 billion pound($14 billion) market found major banks had increased marketshare since its last assessment in 2008, entry by new playersremained infrequent, and consumers, lacking confidence in theswitching process, still rarely switched to a rival provider.

The British Bankers' Association welcomed the decision notto make a referral to the Competition Commission.

The OFT said it will look at the matter again in 2015,adding there had been improvements in the market, with customersnow saving up to 928 million pounds annually from a fall inunauthorised overdraft charges from 2007-11.

"Overall, a combination of a lack of competition, low levelsof innovation, and customer apathy in the face of unclear costsand a lack of diversity in the choices of current accountsavailable mean that this market is not working well forconsumers or the wider economy," the OFT said.