Fighting Fund Set Up

Who would be a banker in today's Britain?

Gone are the days when the bank manger was a respected gentleman, in the Captain Mainwaring mould. Now the image of banks and their staff is that of a tacky used car salesman, trying to dishonestly screw the hapless customer out of every penny they own.

Another nail has been knocked into the coffin of the banks' credibility, by the launch of a £100,000 fighting fund to encourage people to launch legal challenges against what they say are illegal bank charges.

The money has been pledged by MoneySavingExpert.com and the Consumer Action Group, as well as private individuals.

The theory being that the funds will be used for claims that could set a legal precedent, in the fight against excess overdraft charges. The move comes after two county courts ruled against two customers of Lloyds TSB.

In the first, a district judge at Birmingham County Court dismissed a claim Kevin Berwick brought against Lloyds TSB on the grounds that charges were a legitimate part of the current account service and found that he had failed to lodge sufficient evidence.

The second ruling, made against a claim for £3,000 brought by Julian Rudd, came on 11 May. A judge at Lancaster County Court also found Mr Rudd, a builder, had failed to state an adequate claim.

Claims from customers have risen by 40%, according to the Financial Ombudsman. Hardly surprising, given the amount of media coverage now given to the issue of bank charges.

Which? claims that the penalty charges earn British banks £4.75BN a year.

The fund will be held in a trust by the Govan Law Centre, and will be activated when the right case presented itself.

Marc Gander, the co-founder of the Consumer Action Group, said:

"Those who do go to court usually win by default. Yet for the rare few where the bank does put up a defence, the big lesson to learn is that even where [the banks] don't show up in court, it is still worth doing proper preparation."

We shall see.

It should be remembered, as I have stated many times before, that banks are not charities. In the event that penalty charges are reduced, or capped, they will find other ways to levy charges on their customers. The most likely avenue being an end to free banking.

What will the campaigners say to that?