Research found charges for going overdrawn for two days per month without permission range from £120 to £900 a year, leading to confusion for consumers.
Customers who stay in credit also lose out through punitive charges levelled on withdrawing money abroad.
A senior executive at the FSA told Which? regulatory intervention may be needed to curb the problems arising from supposedly free banking.
Which? chief executive Peter Vicary-Smith said hidden charges “completely shatters the myth that banking is free”.
“The suggestion that banks should increase charges to avoid more scandals defies logic and is a slap in the face for consumers who are being hit hard by one of the worst financial crises in recent times,” he said.
“It’s a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like PPI mis-selling, LIBOR rate-rigging and IT failures.
“Banks must be far more transparent about their fees and charges so that people can clearly see what they already pay.”
He called for new regulator the Financial Conduct Authority to clamp down on high or complex overdraft charges, as well as encourage greater competition on the high street.
Many European retail banks currently level a monthly charge instead of relying on cross-selling or high hidden charges for income.
Peter McNamara, former head of personal banking at Lloyds, told the Today programme if UK banks wished to operate a similar system they would need to charge between £4 to £5 per month.
However, he said the idea of “suddenly enforcing or regulating some charges on accounts is an extraordinarily unattractive one”.
John Howard, former chairman of the consumer panel at the FSA, said he was in favour of monthly charges for a number of reasons.
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Customers do not know “what the real cost of providing that basic banking service is”, he said. “Banks have to be honest with us about what it really costs to provide that bank account.”
“Consumers are immensely angry with the banks about everything that’s happened, and the typical reaction is why should we pay banks even more.
“But there are real concerns that the regulator is trying to address, that free banking is creating distortions in the marketplace.
“[The lack of a monthly charge] makes it more difficult for new banks to enter the market.”
The current system may have created the climate that led to the mass mis-selling of payment protection insurance (PPI), Howard added that it encouraged banks to cross sell products, “and we’ve already had far too many cases of mis-selling”.