How much have the banks re-paid?

ANALYSIS
by Ian Pollock
Personal finance reporter, BBC News

Tom Brennan failed in his challenge to the NatWest's overdraft charges

So, how much have the banks repaid to people complaining about overdraft charges?

The long-running saga has seen tens of thousands of people sue their banks successfully for the return of overdraft charges on their current accounts.

A startling headline in the Independent - based on a YouGov opinion poll - suggests that £2.6bn has been repaid to 3.8 million people since 2001.

And that nearly a million claims are now in limbo until the legal issues are resolved by a test case next year in the High Court.

These figures read as if they were totted up on the back of a fag packet Angela Knight, British Bankers Association

The British Bankers Association (BBA) is furious at these claims.

Its chief executive, Angela Knight, denounced them as dangerous and potentially misleading.

"These figures read as if they were totted up on the back of a fag packet," she said.

The BBA's director of statistics, David Dooks, added that the claims were "what gives statistics a bad name".

Online poll

The figures from YouGov, published by the online switching service Uswitch, are certainly big.

But they do not tally with any other known facts.

At the end of July the five big high street banks finally came clean and admitted just how much they had been forced to refund in the first six months of this year.

It came to £399m.

BANK REFUNDS IN 2007 Barclays - £87m HSBC - £116m HBOS - £79m Lloyds TSB - £36m RBS - £81m Source: bank interim results

The BBA estimates that these banks - HSBC, Barclays, RBS, Lloyds TSB and HBOS - account for about 70% of all UK current accounts.

That suggests that the other banks and building societies which have been targeted by disgruntled customers - such as the Nationwide, Alliance & Leicester, Clydesdale and Yorkshire banks - have refunded about £171m or so between them.

That would bring us to a grand total of £570m handed back to customers in the first half of this year alone.

Earlier years

However, that does not mean that similar sums have been handed back in the previous months and years.

The campaign to challenge the banks' overdraft fees only really took off at the start of 2006 and has been growing rapidly ever since.

Before then hardly anyone had thought of challenging them.

With many claims taking months to settle, the first six months of this year have undoubtedly been a peak for this process.

The idea that about £2bn more had already been refunded by the banks in the years from 2001 to the end of 2006 - with not a hint of any such thing being revealed in their half yearly or annual accounts - seems a bit far-fetched.

According to the BBA, the figures only became "material", in other words big, this year.

Claimants

Just how many people have in fact got some money, either in the past six months or the past six years?

The volume of court cases effectively required further action to resolve the situation BBA spokesman

The banks will not say but we can have a stab at coming up with a figure.

The web site of the leading campaign group the Consumer Action Group (CAG) tots up the successful claims that its members tell it about.

To date, £16,026,800 has been repaid to 9,243 people.

Some has been for credit card default fees, but assuming these figures are relatively meaningful it seems claimants have been handed an average of £1,734 each.

That would suggest, in turn, that the £570m returned in the first half of this year went to a total 329,000 customers.

Now, that would certainly be a lot of people for any industry to be refunding.

But it is a very long way short of the 3.8 million people that YouGov and Uswitch say have been refunded since 2001.

Secretive

The banks are partly to blame for being lambasted with figures they now denounce as wildly exaggerated.

Until they published their half-year results this summer, they steadfastly refused to say anything at all about the subject.

This was despite the fact that hundreds of cases were going through the local courts up and down the country, in full view of anyone who cared to turn up.

This was all rather embarrassing, and anecdotal evidence suggests that it was also becoming a considerable burden.

The banks have been forced to spend millions of pounds employing more staff and buying equipment, such as microfiche readers, to deal with the deluge of claims.

In turn, many turned into legal cases once the banks turned down the initial letters from their customers.

As a BBA spokesman told BBC News last week "the volume of court cases effectively required further action to resolve the situation".

That is why the banks have now agreed to a legal test case next year in the High Court.

And when that happens, rather more light will be shone on just how much the banks have refunded, and how much it really does cost to bounce a cheque or send a customer a letter telling them they have strayed into the red.