The banking industry defends its charges

Joanna Elson, executive director of the British Bankers' Association (BBA), was keen to stress that unauthorised overdraft fees were not a penalty but a fee for a service. "The customer has not had the loan agreed. It is not that difficult to arrange an overdraft," she says. "In many cases, the current account provider protects the customer's reputation by not bouncing cheques and direct debits." Ms Elson added that the BBA's own research had shown that UK banking customers enjoyed a better deal than their mainland European counterparts. "In the UK, free banking is a reality in other parts it is not," she argues. "Many people abroad have to pay tariffs for cashing cheques as well as a monthly management fee."

Seymour Fortescue, chief executive of the Banking Code Standards Board (BSCB), which administers the voluntary rules governing how financial institutions treat their customers, told BBC News that reform of charging was necessary. "Disturbingly, the charges fall hardest on people on low incomes, such as students, who can least afford them," Seymour Fortescue, chief executive of the BSCB told BBC News. "What I would like to see is greater transparency over charging," he says. "There should be a summary box on statements outlining all the charges and a 14-day notification period before a charge is imposed. "This should ease the problem of charges being imposed on charges."