Banks Agree to Charges Test Case

Listening to the Wake Up to Money podcast this morning, I hear that HSBC, LLoyds TSB, RBS and Nationwide will be going to court to establish a precedent on the legality of bank charges. The central point is whether the sums involved can be justified as being service charges which reflect the actual cost of providing the service (and if so, how much of a profit are the banks entitled to make?) versus penalty charges, which are illegal.

I wonder how the banks will justify their charges given the revelations in the BBC Whistleblower programme, aired back in March. In it, the reporter obtained footage showing a Barclays manager claiming that the true cost of bouncing a direct debit (for example) was £1.50-£2.

You can find the clip on YouTube:


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