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Last Updated: Thursday, 15 March 2007, 00:06 GMT
Do the banks have a guilty secret?
By Ian Pollock
Personal finance reporter, BBC News

Transparency may be the fashionable buzzword of the age, but not if you are a bank dealing with thousands of demands to refund overdraft charges.

Nationwide branch in Exeter
The Nationwide has been receiving 5,000 claims a week

In the past few weeks, hundreds of thousands of people have been downloading letters from websites such as those of the BBC, Which? and campaign groups, aimed at reclaiming excessive bank overdraft fees.

It has been said that up to two million of these letters have been printed off.

A lot of money is at stake.

Analysts at the bank Credit Suisse recently estimated that the UK's high street banks earn about 1.2bn a year between them by levying penalty charges on customers who go overdrawn without permission.

Commercial confidentiality

How many of these letters have actually been sent to the banks? And how much money have they paid out?

We are not providing that data
Barclays bank

The banks will not say yet.

"We wouldn't like to divulge those sorts of numbers," said a spokeswoman for Barclays, citing "commercial confidentiality".

At Lloyds TSB, the response was very similar.

"We wouldn't disclose that number," the spokeswoman said.

Guess what the helpful man at the HSBC press office said?

"We are not providing that data. It is a competition issue and is confidential."

However, a hint came last month when Stuart Bernau, an executive director of the Nationwide, said his building society was being sent 5,000 complaints each week about overdraft fees.

"It is now considerably more at the banks," said a well-informed industry observer.

"It is also operationally a major headache," he added.


There is no doubt that money has already been refunded.

CAG website
Nearly 8.4m has been recovered so far by CAG members

Since this consumer revolt started about a year ago, the website of the Consumer Action Group (CAG) has been logging the repayments of members who tell it of their successful claims.

So far, nearly 6,000 people who have used the CAG web site have received almost 8.4m as a result of challenging their banks' overdraft penalties.

"We are getting a real upsurge in the use of the site," says Marc Gander of the CAG.

With newspapers and the likes of Which? whipping up a big campaign recently to encourage even more claimants, the figures are likely to become even larger, especially as the banks appear to have a policy of always caving in once the case goes to court.

"Loads of ambulance chasers are now springing up. The word is spreading like wildfire," said Mr Gander.


So how many claims are now in the pipeline?

It is not necessary for us to know the numbers of complaints
OFT spokesman

"We would love to know that, but nobody will tell us," said Helen Ainsworth of Which?

Rather surprisingly, the Office of Fair Trading has not asked, even though it is in the middle of an inquiry into the banks' overdraft fees.

Its report will be published in a month or two and may call for these fees to be slashed, just as it did last year with credit card default fees.

"They didn't ask the question," said an OFT spokesman of the inquiry team.

"It is not necessary for us to know the numbers of complaints.

"The OFT has identified a potential problem and that it is serious enough for us to look into - that is what we are doing at this stage," he said.

The Financial Services Authority has also just started a review of the general procedures banks have in place for dealing with complaints, to make sure they are fair, prompt and consistent.

But again, it appears that a straightforward question about how many complaints have been received concerning bank charges may not form part of such an inquiry.

Eventual disclosure

Even so, the true scale of these customer refunds will probably emerge in the next few months.

The number will probably shoot up if the OFT says the current fees for unauthorised overdrafts are too high, thus encouraging many more people to claim.

If that happens, the scale of the refunds could force the banks to disclose the sums involved to investors in their annual profits announcements.

"Much more than 10m for each institution is the order of magnitude at which they would think of disclosing," said one City banking analyst.

"I think this will turn into a bigger issue than it has become so far," he added.

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