TSB are one of eight high street banks/building societies who tasked the Office of Fair Trading into holding a Test Case to look into the level of charges and seek a ruling on whether or not, they were lawful.

We now know the OFT has seriously failed in their mandate as the Test Case will not be looking at a lawful level of the charges, so this move by Tsb has many wondering if they are prempting the inevitable and suggesting their own 'voluntary reduction' in advance.

The OFT have said previously they would only take enforcement action should a voluntary agreement not be forthcoming with the banks, so a threshold limit akin to the Credit Card Charges investigation was expected by many anyway.

The new level of the charges will be introduced on November 2nd by the bank and experts now believe that many other banks will follow suit, no doubt in the hope that when they lose the case the OFT will bow down and accept the reduced charges as an acceptable agreement.

TSB have already refunded at least £36 million in the first half of the year to reclaimers challenging them in the courts over whether these penalty charges were lawful or not.  Between all the High Street banks and building societies the figure is well in the region of £570 million for the same period.

Speaking to the press as they made the announcement, Ian Larkin of Lloyds Tsb said the decision was simply a response to consumer feedback and was not an attempt at predicting the outcome of the test case with the OFT:

"We want to help our cusomters avoid accidentally slipping into the red and are giving them the tools to do just that.

"We understand that it can sometimes be difficult for customers to keep tabs on their account and we want to make it easier."

A noble gesture isn't it.  Strange though when you compare it to their normal behaviour of being thoroughly (in my experience) unhelpful over the phone when you seek help, and contrary to their behaviour when you do request your charges back.

It appears Lloyds TSB may now not think their charges are 'fair, clear and transparent', nor that a customer should know what is in their account at all times.  Interesting that they failed to acknowledge that many customers actually end up in trouble and in the 'red' through the very charges that Lloyds TSB levy on their account - the snowball effect of their regime is by far the most damaging aspect of the penalty charges curse.

Anyway, from November 2nd (you can appreciate it takes over a month to change their fully automated systems) instead of charging customers £30 a day for going into the red without permission, they will now charge £15 and then between £6 and £20 on a sliding scale according to the level of the overdraft.

For bounced cheques or direct debits you will now be charged £20, as opposed to £35.

Interestingly enough, as I included that their unauthorised overdraft interest rate was also potentially an additional penalty in my Particulars of Claim, they are cutting that interest rate by a third to bring it into line with their authorised interest rate.

Customers will also be given until 3.30pm on the day they go overdrawn to rectify the situation and avoid all costs and TSB are introducing a new text messaging service that will alert you if you are within £50 of your account limit, or when you go over your limit.

Mr Larkin finished by saying:

"Customers who do accidentally go over their limit, will be better off as they have the chance to top up their account and get themselves back on track."

It was predicted a long time ago that we would soon see more changes to the Terms and Conditions and literature of banks as they thoroughly moved away from liquidated damages clauses to 'service based' terms, the above seems to prove they are doing that faster than we all thought.