The annual report from the Financial Ombudsman Service shows a huge increase in complaints about bank charges in the last financial year.

The total number of cases investigated last year increased by 47% to 20,000, with 1,000 new cases now taken on each week. This increase is largely due to complaints from current account customers who have had charges imposed on them for unauthorised overdrafts. The report notes that so far the banks have refunded the money in every case dealt with by the Ombudsman. Therefore the service has not yet had to carry out a detailed investigation.

In contrast the number of complaints about the mis-selling of mortgage endowment policies is now falling. In recent years endowment policies were the main source of complaint, but the latest report shows that last year the figure dropped by one third, to 46,100.

The report comes as some banks are accused of exploiting the outcome of a recent court case. In the first case of its kind Lloyds TSB successfully defended unauthorised overdraft charges imposed on a customer. Some banks are now quoting the judgement in correspondence with their customers and the suggestion is that they are attempting to put people off continuing with a claim. However, consumer groups point out that the judgement does not set any legally binding precedent.

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