Are banks making too much profit?

Banks are making billions of pounds each year from penalty charges. But now the legality of these charges - which cost their customers an average of £30 a time - is being called into question and thousands of customers want their money back.

Until now banks have pretty much called the shots when it comes to charging. But it simply isn't legal to penalise customers by making them pay more than it costs when they go into the red.

Banks can charge up to £30 just to inform you that you're overdrawn, but the law says charges like these should reflect how much it really costs! More and more customers have challenged the banks over the fairness of their charges and won back their money after threatening to take legal action.

The UK's banks repaid more than three-quarters of a billion pounds in 2007 to customers who sued for the return of their overdraft charges.

And the BBC's estimates suggest they may also have avoided repaying as much as £1.37bn due to a legal stay on new and current claims because of a court case.

The calculations are derived from the figures published in the annual results of the five major banks, the last of which was released.

With the banks' annual reporting season now over, they have now revealed just how much they were forced to pay out last year.

The sums revealed come to this:

Lloyds TSB - £76m
Barclays - £116m
HBOS - £122m
RBS Natwest - £119m
HSBC - £116m

That adds up to £549m for the big five high street operators alone.

With thousands of customers don’t banks make enough profit out of having everyone’s money in their safes already? Log on to the forum and tell us what you think!

Released on Friday 26th September 2008