England:  Startling new evidence has emerged about how banks overcharge customers who go into the red. Managers at Barclays boasted to an undercover reporter that bouncing a check or stopping a direct debit costs the bank as little as $3-$4 (£1.50 or £2) to administer.

The revelation comes as hundreds of thousands of bank customers attempt to reclaim "illegal" current account charges of up to £40.

By law, the banks are not allowed to make a profit from these charges, only cover expenses such as sending a letter.

But a reporter for the BBC programme Whistleblower who worked for Barclays heard colleagues admit how customers were hit by charges 15 or 20 times higher than their true cost.

In the programme, broadcast on BBC1 last night, one banker said: "Bouncing a direct debit costs the bank maybe a pound fifty, two pounds banking charges. But we bill the customer thirty quid to thirty-five quid. So that’s a bit unfair."

But another manager said the charges are justified because "we are a business and we are here to make money. I’m a shareholder so we need to continue to make profit."

Amanda Egbujo, a journalist, spent two months working for a Barclays call centre near Sunderland and at a branch in Guildford. One angry customer was filmed complaining about how she was charged £90 for going £100 overdrawn despite being a long-standing customer.

A bank trainer named Simon said that most customers who complained about the charges would not get their money back. "My attitude was, well I don’t know you, I don’t care." Only wealthy customers were likely to be refunded because the bank was worried about losing their business, he said.

Ms Egbujo also spoke to a former banker who claims it only takes "a few minutes" to process a bounced cheque at a cost of "a couple of pounds".

The banks have never admitted that they make a profit from bank charges, which are estimated to total £4.5 billion a year. Barclays, which made a record £7.14 billion profit last year, told the programme that its charges were set according to a complex formula. It would not comment further until the result of an investigation by the Office of Fair Trading. The OFT is expected to say that charges should be no more than £12, opening the floodgates to claims running to billions.

Other practices revealed in the programme included:

• "Upgrading" customers to Barclays’ Additions account, which charges a fee of £14 a month, without their agreement. Bankers get a £10 bonus for every Additions account sold and one was quoted, saying: "If we’ve got four million customers paying £14 a month, another £60 million comes in. Thanks very much."

• Consultants from call centres who mislead customers by claiming that they want to talk about their accounts when really they are trying to sell a financial product. One even details how women with Liverpudlian accents are easier to sell to because they have lots of debt or "want a new kitchen".

• Bank workers who access the account details of famous people without their permission.

A spokeswoman for the bank said the scenes filmed for the programme were not "in any way representative of the way in which Barclays does business".

She continued: "We are not in the business of encouraging or condoning misselling or inappropriate sales in any way – We pride ourselves on being a responsible institution that puts its customers first."

• LAST year The Scotsman revealed thousands of Scots had started demanding a refund of bank charges which were ruled excessive by the OFT.

And hundreds have taken their bank to the small claims court and won payouts of as much as £15,000. Thousands more have had the money refunded by their bank without a fight.

The consumer watchdog Which? claimed banks made £4.7 billion last year from charging fees and interest rates on unauthorised overdrafts, even when the amounts were small.

Marc Gander, the co-founder of the Consumer Action Group said: "Banks say that they do not make profits from these charges but it’s just not true and they’re taking us all for idiots."

Via The Scotsman