Lloyds Banking Group has rebutted allegations that it is charging customers by stealth, and instead argued that the cost of a having a current account was the same as that of a weekly cup of premium coffee.

Britain's biggest high street bank denied that it was charging exorbitant rates from its current account holders and that it had not made its charges transparent.

The bank countered that the market was "enormously competitive", even as MPs accused it of enjoying "monopoly profits" in a chronically under-competitive market.

Lloyds accounts for 29 per cent of Britain's current account market, with 24m customers.

Banks claim that current accounts are free because they have no upfront fees, but customers do end up paying £2.50 a week for the service - the equivalent of the cost of a cup of coffee - according to Lloyds.

Customers lose a certain percentage of interest if they deposit money in a low-yielding current account rather than a savings account.

However, Helen Weir, Lloyds' head of retail banking, defended the bank by saying that the profits from their current account business were "not excessive" as they had to take care of branch overheads and staff costs.