News that HSBC paid out £116m to customers claiming unfair overdraft charges in the first half of 2007 alone, came as a surprise to customers and the banking sector alike.

The figure is far higher than expected - the most recent estimate by analysts at Credit Suisse for the banking sector’s liability in the first half of 2006 was £200m . As HSBC represents 14 per cent of the UK current account market, the bill for the whole of UK banking sector in the first half of 2007 could be as high as £1bn.

But with the issue due to be settled in the courts, (following last week’s announcement that the OFT will bring a legal action against nine of the UK’s largest high street banks), both sides have agreed to a temporary truce. All claims that are currently in progress will be put on hold, pending the outcome of the court hearing.

So where does all this leave the banks and their customers?

Clearly it was in everyone’s interests that a legal precedent be set to settle the issue once and for all. The time and cost of dealing with thousands of individual claims was causing chaos at the banks and in the county courts.

If the judge hearing this case rules against the banks, the cost of meeting all claims will be horrendous, but causing only short term damage to banks’ balance sheets. The banks are accountable, after all, to their shareholders and will simply recoup their losses elsewhere.

Even if customers lose this case, I doubt whether the status quo ante will remain in place. After the emotion that this issue has caused over the last year, I doubt whether the banks will continue that to penalise delinquent customers to benefit their solvent ones.

The start of the change in how banks charge their customers is apparent for all to see. First Direct set the ball rolling in March with the introduction of a £10 a month fee on its current account. Lloyds Bank has just informed its Plus Account customers that it will only pay interest on credit balances of £2,500 from the end of August, rather than £5,000 as at present.

Other banks are encouraging customers to switch to ‘premier’ current accounts, which typically charge £10 a month or more, for a range of ‘free’ extras such as free travel and roadside insurance.

Another source of extra revenue is foreign currency transactions, where banks have been quietly upping their charges on both cash withdrawals and credit card transactions.

Defaqto head of banking, David Black, reckons that cheques will be the next target for the banks to make a charge for.

While the fees charged to delinquent customers probably are unfair, what we don’t want to see is the banks using the outcome of this case as an excuse to switch all customers to European-style bank charges, whereby customers pay through the nose for all transactions.

That would be a loss for everyone and we mustn’t let the banks get away with it.

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Banks continue to pay scant regard to customer confidentiality, as this tawdry tale of a NatWest customer’s battle with a local branch of the bank portrays only too vividly.

Hazel Speed, a self employed writer, from Welling in Kent, shares the same phone number as the Bromley branch of NatWest - apart from the bank’s 0845 prefix and Miss Speed’s 0208.

This has led to hundreds of NatWest customers ringing Miss Speed’s telephone number over the last six years - since 2001 when Cable & Wireless installed the bank’s current phone number.

Miss Speed says: “People ring me up thinking I’m the bank and give detailed information about their bank accounts. Sometimes they give instructions to transfer thousands of pounds between accounts, so I am sure I could easily get their PIN numbers if I wanted to. If I was not an honest person, I could have defrauded the bank’s customers of hundreds of thousands of pounds by now.”

Despite alerting the bank to the problem in 1991, NatWest has refused to change its number. Instead, Miss Speed says the bank has sent her bullying letters telling her to change hers instead. Meanwhile she continues to re-direct numerous callers to the bank.

BT says the last seven digits of Miss Speed’s number should be unique to her and that Cable & Wireless was at fault when it supplied the same number to NatWest.

Why NatWest is refusing to do the decent thing and change its number is hard to fathom, particularly when Miss Speed has been a customer of the bank for 30 years.

Small wonder, then, that bank customers are so angry with their banks when the latter show such cynical disregard for their customers’ financial data and the distress they cause.

NatWest seems to have forgotten the undertakings the high street banks were required to give the Information Commissioner, Richard Thomas, last month when he admonished them for a series of security breaches involving customer data.

Even assuming this wrangle is eventually sorted, Miss Speed deserves some sort of compensation for the trouble it has caused her. “Quite apart from the potential security breaches, the calls have been a real nuisance because I work from home. If there’s a lawyer out there who would like to act pro bono for me, I would like to hear from them” she says.

Anyone venturing abroad this summer had better think carefully about the type of plastic they take with them. The banks are raising the cost of using credit and debit cards abroad by upping a whole range of hidden transaction fees.

Just withdrawing cash from a hole in the wall will attract, in most cases, a charge of about £2 a time, while the purchase of goods and services made on credit and debit cards will attract currency conversion fees as well as a flat fee of around £1-£2 as well.

Then there is the notorious “foreign exchange loading” which has been upped to a massive 3 per cent on Morgan Stanley’s Goldfish card – a whacking 0.25 per cent more than what most other providers are charging.

Debit cards issued by NatWest, Royal Bank of Scotland and Lloyds TSB have also had their foreign loading rates increased, with Lloyds TSB’s jumping from 2.75 per cent to 2.99 per cent, from the end of July.

Only a few cards, such as Nationwide’s Gold VISA and the Post Office’s Platinum Master Card, don’t impose foreign exchange loadings on overseas transactions.

For the over 50s, Liverpool Victoria and Saga issue credit cards without foreign exchange loadings, but only for usage in EU countries.

For cash withdrawals, you would be well advised to arm yourself with a Nationwide Flex Account card - the only card that doesn’t charge the normal £2 transaction fee.

The worst trick of all to watch out for while abroad is the pernicious “dynamic currency conversion” scam, whereby the merchant charges you in your home currency and then converts the bill back into the local currency at an exchange rate of their choice. The bill then has to be converted yet again back to your home currency by the card provider, incurring yet more charges.

Clearly, these stealth charges are just one of the ways in which the banks are recouping some of the income they have lost through the recent clampdown on penalty fees and overdraft charges. But whether the banks are making these fees clear enough to their unsuspecting customers is a moot point.

I expect millions of holiday makers are in for a nasty shock when they open their bank and credit card bills on return from holiday this summer.