Over the years, like many, I’ve fallen foul of bank charges - being charged a fee because my account was over the overdraft limit.  More often than not I didn’t know anything about it and was blindly continuing to pay for things, therefore attracting even more charges! This was totally my fault for not keeping a closer eye on both my spending and my bank balance, so I just took the charges on the chin and soldiered on.

Many people didn’t just accept that this was all their own doing and decided to fight back against the banks either because they thought they shouldn’t have been charged at all or that they shouldn’t have been charged so much. This has come to the fore recently as there are quite a few websites and forums setup to help people argue the case with their banks in the hope of reclaiming these charges.

Normally I’m of the opinion that if you sign up to something, in this case you open a bank account with Bank X, and in the contract it states that if you do a certain thing then you will be charged for it, and you then go on to do that thing then Bank X are entitled to make the charges set out in their documents.

So while I don’t really agree with the stance which says banks shouldn’t be allowed to charge you if you go overdrawn for a few days, I do agree that the amount the banks are charging does seem a bit excessive - which I would think is the attitude most people would have.

Apparently the banks should only charge customers enough to cover their costs, ie they shouldn’t use bank charges as a way to make a profit - they make enough of them as it is.  I watched a programme on TV a few months ago, where the reporter had gone undercover to work in a bank and she found out that the total administration cost to a bank of them having to bounce a payment is approximately £2.00 yet bank charges I’ve had have been as much as £38.00.

Literally millions of people are affected by this, and well over a million have either applied for their charges to be refunded, or are in the process of doing so.  The banks seem a bit scared that if one person actually takes them to court and the ruling says that the charges are excessive then they will have to repay everyone’s charges so until now they have been keen to settle out of court and a high percentage of claimants are successful in getting at least part of their charges back.

However, the banks have grouped together and decided to have a test case - though the literature I’ve had said this test case was to find out whether the banks are right to be making charges or not rather than determining exactly how much they should be charging.

I’ve no doubts the courts will decide it is fair to make the charges, but as they aren’t being asked to set a limit on how much they can charge then it’s not really getting anybody any further forward.

What it is doing is giving the banks some breathing space.

Currently they must be dealing with an incredibly long backlog of claims, and are paying out huge sums of money to keep the claims out of the courts (reports estimate that banks have paid out something in the region of £500 million in reclaimed charges) - by running this test case, it means all current claims are put on hold until this case is decided, thereby giving them anything up to a year to put contingency plans in place.

In the meantime, anyone in the process of claiming has to sit back and wait while the banks are allowed to continue to make these charges - surely the fair thing would be to say that okay noone can claim in case the charges are lawful, but the banks can’t charge in case they are unlawful!

There are a couple of things that we can do while we wait though.  The excellent website MoneySavingExpert has setup an online petition in the hope that new PM, Gordon Brown, will take up the fight and hopefully get this sorted out speedily.  You can add your name to the growing list here, after you have read Martin Lewis’ Bank Charges Charter which details what he feels are fairer conditions for the application of charges, and how much they should be.