The Guardian - Banks may have to set aside billions for refunds

High-street banks may be forced to admit how much they are paying out in reclaimed overdraft fees when they publish their interim results in the summer. Industry sources believe some of the main players may be required to take provisions to cover the refunds that customers have been urged to claim by consumer bodies and the Office of Fair Trading.

The cost could run to billions of pounds since the consumer body Which? has calculated customers pay £4.7bn a year on default charges, which can include £39 for a bounced cheque and £28 a day when an account is over its authorised limit. Customers can claim back six years of fees.

The banks have so far refused to admit the extent of the claims they are receiving and how much they are paying out. The OFT's intervention has prompted the sector to embark upon a major review of current accounts - the industry's staple product - and how they work.

"All the banks are having discussions about what to do with their business models," one banker said. The industry believes the outcome will take some time to evolve but there is growing debate about the future of free banking. Only customers with basic bank accounts that the Treasury forced the industry to offer to customers on social security benefits are likely to be protected from charges.

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