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Bank charge refunds may hit £900m
Analysis
By Ian Pollock
Personal finance reporter, BBC News
Mr Justice Andrew Smith's judgement may trigger more claims
The UK's banks may have refunded nearly £900m last year to customers who complained about their overdraft charges.
Last August, I estimated that all the UK's banks - the big five plus smaller banks and building societies - had probably refunded £570m between them in the first half of 2007.
But figures published from just two banks suggest that the industry-wide total may now have risen to £889m.
Full-year profit figures at Barclays and Lloyds TSB show they repaid a combined £192m in 2007.
Barclays repaid £116m, up from the £87m revealed at the time of its half-year results.
Lloyds TSB has refunded £76m, up from the £36m repaid at the half-way stage.
BANK REFUNDS, FIRST HALF 2007
Barclays - £87m
HSBC - £116m
HBOS - £79m
Lloyds TSB - £36m
RBS - £81m
Source: Bank interim results
How much did banks repay?
If the 56% increase seen over the second half of the year at just those two banks is applied to the whole of the UK banking industry, then this produces an estimated total refund for the year amounting to £889m.
"It is obviously very satisfactory," said Marc Gander of the Consumer Action Group (CAG).
"There is a lot more to come," he added.
Test case
Tens of thousands of refund claims are still in the legal pipeline, frozen because of a stay on current and new cases.
We made more settlements up to the stay, and we also honoured offers that had already been sent out 
Lloyds TSB spokeswoman
This was put in place last year, when the High Court was asked to decide a test case on the issue between the Office of Fair Trading (OFT) and seven banks and the Nationwide building society.
Both sides are now waiting for the judge, Mr Justice Andrew Smith, to make his judgement, which is expected some time in the next two or three months.
A spokeswoman for Lloyds TSB explained that the extra payments it made in the second half of the year were largely due to claims that had been settled in July before the stay came into force.
"We made more settlements up to the stay, and we also honoured offers that had already been sent out," she said.
Barclays gave a similar explanation.
"Banks were obliged to contact customers who had been offered settlement but not yet accepted and give them two months in which to accept a settlement of their claim on terms previously offered to them, or to put the claim on hold pending the result of the case," said a spokesman.
"The figures also include settlements of cases not subject to the waiver or otherwise stayed," he added.
Profits
The other big current account providers, HSBC, RBS NatWest and HBOS, report their annual results in the next few weeks, part of the banks' annual "reporting season".
Even if, between them, they have had to refund about £900m, this will be a small amount compared with the huge profits they are still making.
So far, Lloyds TSB and Barclays have announced pre-tax profits for last year of £11bn between them.
What will worry them is if the High Court test case, and any subsequent appeals, force them to make further refunds to millions of other customers who have yet to make any claim, possibly going back over the past six years.
"We are pleased to see banks are repaying significant amounts of bank charges, despite the ongoing test case," said Chris Warner, lawyer at the consumers' association Which? "If the banks lose the test case, we hope the banks will refund their customers automatically without having to make a claim," he added.
Analysis
By Ian Pollock
Personal finance reporter, BBC News
Mr Justice Andrew Smith's judgement may trigger more claimsThe UK's banks may have refunded nearly £900m last year to customers who complained about their overdraft charges.
Last August, I estimated that all the UK's banks - the big five plus smaller banks and building societies - had probably refunded £570m between them in the first half of 2007.
But figures published from just two banks suggest that the industry-wide total may now have risen to £889m.
Full-year profit figures at Barclays and Lloyds TSB show they repaid a combined £192m in 2007.
Barclays repaid £116m, up from the £87m revealed at the time of its half-year results.
Lloyds TSB has refunded £76m, up from the £36m repaid at the half-way stage.
BANK REFUNDS, FIRST HALF 2007 Barclays - £87m
HSBC - £116m
HBOS - £79m
Lloyds TSB - £36m
RBS - £81m
Source: Bank interim results
How much did banks repay?
If the 56% increase seen over the second half of the year at just those two banks is applied to the whole of the UK banking industry, then this produces an estimated total refund for the year amounting to £889m.
"It is obviously very satisfactory," said Marc Gander of the Consumer Action Group (CAG).
"There is a lot more to come," he added.
Test case
Tens of thousands of refund claims are still in the legal pipeline, frozen because of a stay on current and new cases.
We made more settlements up to the stay, and we also honoured offers that had already been sent out Lloyds TSB spokeswoman
This was put in place last year, when the High Court was asked to decide a test case on the issue between the Office of Fair Trading (OFT) and seven banks and the Nationwide building society.
Both sides are now waiting for the judge, Mr Justice Andrew Smith, to make his judgement, which is expected some time in the next two or three months.
A spokeswoman for Lloyds TSB explained that the extra payments it made in the second half of the year were largely due to claims that had been settled in July before the stay came into force.
"We made more settlements up to the stay, and we also honoured offers that had already been sent out," she said.
Barclays gave a similar explanation.
"Banks were obliged to contact customers who had been offered settlement but not yet accepted and give them two months in which to accept a settlement of their claim on terms previously offered to them, or to put the claim on hold pending the result of the case," said a spokesman.
"The figures also include settlements of cases not subject to the waiver or otherwise stayed," he added.
Profits
The other big current account providers, HSBC, RBS NatWest and HBOS, report their annual results in the next few weeks, part of the banks' annual "reporting season".
Even if, between them, they have had to refund about £900m, this will be a small amount compared with the huge profits they are still making.
So far, Lloyds TSB and Barclays have announced pre-tax profits for last year of £11bn between them.
What will worry them is if the High Court test case, and any subsequent appeals, force them to make further refunds to millions of other customers who have yet to make any claim, possibly going back over the past six years.
"We are pleased to see banks are repaying significant amounts of bank charges, despite the ongoing test case," said Chris Warner, lawyer at the consumers' association Which? "If the banks lose the test case, we hope the banks will refund their customers automatically without having to make a claim," he added.
