Leading article: Guilty as charged - and a victory for people power

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The Independent Online

That's more like it. HSBC announced yesterday that it was freezing plans to abolish interest-free loans for graduates, saying it was "not too big" to listen to its customers. The bank's hasty re-think was a response to a virtual protest organised by the National Union of Students on the Facebook website. With 5,000 people pledging to divest themselves of the bank's services, the bank changed its tune. It now says that it will work with the NUS to ensure its new accounts offer "fully reflects the needs of recent graduates".

The climb-down by HSBC was not, of course, born of any charitable sentiment. It reflects self-interest pure and simple. Customer-power – or at least the power of a very particular group of customers – won the day. And that power derived from savvy use of the internet by the NUS and its members. The possibility of collective action, and the threat of potentially lucrative accounts lost to rival banks, changed the balance of advantage between the big corporation and the individual.

The NUS victory over HSBC is just the latest example of people power being applied successfully to rein in commercial practices, or sudden policy changes, that are stacked against the consumer. As if to underline the point, it so happened that HSBC's change of heart coincided with publication of a survey showing just how much ground the banking sector in particular has had to cede to disgruntled customers.

According to the survey, compiled by uSwitch.com, banks have to date refunded the massive sum of £2.6bn in charges to 3.8 million customers, an average refund of almost £700 each. Of all claims made, only 7 per cent have been rejected – whether by the courts, the Financial Ombudsman or the banks. This means that more than 90 per cent have been accepted.

What more conclusive proof could there be that the dice were – and in many cases still are – unfairly loaded in favour of the banks? Or of the justice of the campaign waged by The Independent against excessive bank charges?

The same survey shows that almost 40 per cent of current account holders – nearly 17 million people – have been affected by bank charges over the past six years. It shows that one bank alone, Lloyds TSB, has raked in almost £2bn from charges; of the "big five" banks, HSBC made the least – a mere £1.2bn. Nor will the banks suffer from the Office of Fair Trading's decision to bring a test case against the high street banks to clarify the legality of bank charges. With customers' claims worth more than £700m now effectively on hold, the banks stand to gain more than £20m in interest.

This is not an argument against the bringing of a test case. Clarity on penalty charges – when they are reasonable and at what point they become excessive – is highly desirable. It is an argument rather for ensuring that the OFT's case is heard, and resolved, as soon as possible. Until then, the banks will have the whip hand.

We believe that the banks have in very many cases been opportunistic – and in some cases downright unscrupulous – in the charges they levy. The uSwitch survey shows that barely 60 per cent of customers now enjoy what they present as free banking (even though the lack of interest paid on most current accounts means that they are not, strictly speaking, free). At the same time, charges for routine banking, including overdrafts and credit of all kinds, have soared out of all proportion to the actual cost of those services. And, inevitably, penalty charges inflict most harm on those whose finances are already the most fragile.

We appreciate that banks are commercial concerns. But they have no more right than any other business to gouge their customers. We are asking not for charity, but for fairness.

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